If you have good to bad credit and you’re looking for quick approval, direct private lenders of personal loans are a solid option. These lenders have more lenient eligibility criteria, but be prepared to pay more in interest.
Direct private lenders for personal loans approve and fund loans themselves. They mostly operate online and aren’t affiliated with a major financial institution, such as a bank or credit union.
Applying online to a direct private lender is a good option if any of the following applies to you:
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The annual percentage rate (APR) for private lender loans typically fall between 6.99% and 46.96%. The rate you’ll get depends on factors like your credit score and debt-to-income ratio.
Low interest loans will be offered to applicants with good to excellent credit (660+) and a DTI under 40%.
Other costs that may come with private personal loans in Canada include origination fees (administrative payment for setting up the loan), late payment fees and NSF fees. Direct private lenders differ in what fees they charge, so check the terms of any loan before applying so you know what to expect.
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Below is an example of how much a $5,000 loan from a direct private lender may cost in monthly payments.
| APR | Loan term | Monthly payment | Total loan cost |
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| 9.90% | 1 year | $439.35 | $5,272.16 ($272.16 total interest) |
| 9.90% | 3 years | $161.10 | $5,799.65 ($799.65 total interest) |
| 16.99% | 1 year | $456.00 | $5,472.00 ($472.00 total interest) |
| 16.99% | 3 years | $178.24 | $6,416.60 ($1,416.60 total interest) |
Exact requirements will vary between direct private lenders, but generally you’ll need to meet the following requirements:
To apply for private lender loans, you’ll usually need to provide the following documents:
Keep in mind, if the direct lender offers instant bank verification, you’ll send little to no documents.
With many options online, how do you narrow down your choices? Consider the following features:
Check the lender’s minimum and maximum lending amounts. Some private lenders in Canada offer loans as high as $50,000 or as low as $500, while others don’t go over $15,000 or under $1,000.
These vary among lenders. Minimum repayment terms can fall anywhere from around 6 months to 2 years. Maximum repayment terms can go as high as 5 years or more. A longer term may mean lower payments, but you’ll pay more interest over the life of the loan.
Keep an eye on the annual percentage rate (APR), which reflects the annual cost of the loan. Most private lenders offer fixed APRs that stay the same throughout the loan term. Learn more about personal loan rates.
Like banks, private loan providers have minimum credit score and income requirements, while others are more flexible, evaluating applicants on a case-by-case basis. Keep in mind that lenient eligibility requirements tend to come with high interest rates.
Private loan providers might offer a grace period. For example, a Mogo personal loan allows borrowers to “test drive” the loan for 100 days. If you’re not satisfied, you can pay back the principal, and Mogo will refund your fees and interest. With a goPeer personal loan, you have a 15-day grace period following your payment due date during which you can make your payment with no penalties or impact to your credit score.
You may be able to choose between weekly, biweekly or monthly repayments, although some lenders don’t offer a choice. You may also be able to change the payment schedule, while others may be more restrictive.
NSF fees are common among direct private lenders, while origination fees (administrative fee to process your loan) and early repayment fees are less common. Before signing, make sure you understand the total cost of your loan, not just the interest rate.
Check out real customer reviews before deciding on a private lender. Steer clear of private lenders that pressure you into signing, avoid clearly explaining the terms of your loan or that push you to get loan insurance. Loan insurance adds to the cost of your loan and should be optional.
Some direct private lenders of personal loans give approval and funding on the same day or the next morning at the latest, while others may take longer. If your need is urgent, learn more about emergency loans in Canada.
There are private bad credit personal loans in Canada, but be prepared to pay a high interest rate. Bad credit borrowers are charged higher rates to offset the risk that they’ll default on the loan. The following tips may help you get approved if you have poor credit:
Consider getting a private lender loan if:
Private loans in Canada are a good alternative to bank loans, especially if you have a hard time getting approval, need funds fast or want flexible repayment terms. But make sure you understand all the costs and features of your loan and compare lenders to find the best option for you.
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