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We say something is direct when there is nothing in-between the two points.
This also apply to direct lenders, where lenders lend (give money) to borrowers without any intermediary.
With this kind of transaction, the borrower gets straight access to the lender giving the borrower the chance to solve any issues one on one with the lender.
With direct or straight access to the lender, transactions are easier with less stress as there is a relationship formed between the lender and borrower.
How a direct lenders works
The process involved in getting a loan from direct lenders is basically three steps.
You apply, a decision is taken by the lender and your account is credited when your application is approved.
In the case where your application rejected, you will get to know almost immediately.
Applying for a loan from direct lenders takes barely takes more than three minutes.
The decision to either grant you the loan or reject your offer takes less than two minutes.
If your request is approved, your account will be credited within an hour. Its that’s simple.
This generation is called the instant generation for a reason as almost everything in this times is instant.
Technology these days is so advanced so much so that whatever we want and at what time we are able to get it.
Direct lending is a straight forward transaction between two entities (lenders and borrowers).
There are a couple of direct lending agencies or companies all over.
They can be found in different states in America and if you need a direct lender you can find them online.
What you do is get in touch with a direct lender and interact with them and let them know how much you need to borrow and the length you want to borrow it for.
How a direct lenders works continuation
After you have informed them of how much and how long you want to take the loan for, the direct lender will let you know the interest on such amount, the total amount you will pay.
Direct lenders do make sure the people they are lending to will pay back the loans so they do run a credit check on their clients.
It cuts out other people such as loan companies, or loan brokers checking your credit scores.
Only the direct lender will check your credit score, and when your request is approved, your account will be credited the same day you applied for the loan.
You receiving the money the same day you put in the application depends on whether your application is approved by the direct lender.
Working directly with a lender is done mostly online on the chosen direct lenders website.
Due to your direct access to the lender, you are able to cut out all kinds of duplication and hereby making the process faster.
The most important thing when it comes to direct lending is stable internet connectivity on any device such as your phone, desk top computers, laptop or tablets.
Some direct lenders lend as little as five hundred dollars to as much as thousands of dollars.
All amount given by the direct lender depends on each lenders capability or terms and conditions.
Benefits associated with direct loans
There are a few benefits of direct lending that cannot be overlooked.
Apart from the obvious one which is you do not need any broker to get you a loan from a loan company.
If you do not need a broker to help get you a loan it means you can save the money you would have paid to the broker as broker fees.
Usually brokers are handy when you need loans such as mortgage loans where the amount in question is huge.
Brokers are well vexed in the market and can help get you a good deal with loans that involve huge amounts.
However if you need relatively smaller amounts you do not need the services of a broker to do that.
You can do that directly and save all the money you can towards paying back your direct loan.
If you apply for a direct loan straightforward , you are able to cut out all kinds of delays since you need the money, you will do that with some urgency.
In case your application is rejected because you don’t meet some requirements, you will get to know immediately if you apply directly.
With a broker when your application is denied it might take some time for you to get to know.
The earlier you are made aware, the earlier you can find other alternatives so that the reason for applying for the loan will not be delayed.
Other benefits associated with direct loans
See below for a few more benefits of direct loans
• Approval is quick
Because the transactions are online, the direct lenders use automated decision making technology which shows if you can afford a loan you are requesting for.
Same automated technology runs a credit check on applicant and all of this is done within some few minutes.
A decision will be arrived at as quickly as the time you took to fill the forms and in some cases even faster than the time used in filling the application form.
In cases where more information is needed from you, the direct lender will have a customer service person get in touch with you to provide the needed information.
When more information is needed and a customer service person contacts you, it will be to your advantage if you respond quickly so that a decision can be made on your application.
Note that if your application is not put in early, that can also delay your approval time.
• Good customer service
The aim of direct lenders is to make sure your experience with them is not complicated so that you will not need the help of a third party.
Getting together a great customer service team so that you issues are promptly addressed.
These customer service agents for direct lenders are trained to know the ins and outs of the website so that they can be of help to you anywhere you are on the website.
A third party is completely cut out when it comes to direct loans.
Borrower can get direct contact with the lender and all transactions can be competed within a few minutes.
When you communicate with a third party it is likely your message might be misinterpreted and this might slow the process.
You get to ask the direct lender all your questions and reservations about a loan and you will get your response immediately.
Even if there is a delay you will know why ther is a delay and not wait for a third party to get back to you that there is a delay on your loan application.
Types of direct loans
Before we get to types of direct loans. Let’s talk a bit about what a direct loan is.
We can describe it (direct loan) as a loan transaction which occurs directly between the lender and borrower with no third party involvement.
Direct lenders who give direct loans include the government, non-bank institutions and sometimes the banks themselves.
Sometimes small banks and credit unions also give direct loans but mostly through third party lenders who can give bigger amounts.
With that said direct loans have two types which are well known by most borrowers.
They are home purchase direct loans or student direct loans which are mostly under one umbrella as direct loans.
However, there are other minor type of direct loans such as direct pay day loans.
Home purchase direct loans
In case you are looking for a house to buy, you have two options to go with.
Either you do so (buy the house) through a broker or get the money from a direct lender.
Though some people don’t know the difference, they are two different things that have advantages and disadvantages.
The well known difference is that the broker is like a middle man between the lender and the borrower whiles direct lender is the main person the borrower deals with.
The two can be likened to buying on wholesale basis and buying from a retailer.
Doing business directly with home purchase/ mortgage direct lenders is more fulfilling instead of doing it through brokers.
Make sure to search for great terms and conditions as well as lower interest rates to cut down on your cost.
As little as a one percentage difference on a home purchase direct loan will go a long way to reduce your total amount to be paid.
Student direct loans
The federal government is one way through which students get their students loans.
The student loan is intended to help students through school and to be eligible you must at least enroll in school full time or part time.
Some of the loans given are subsidized whiles others aren’t subsidized all based on the school you are attending.
The federal government gives four types of student direct loans namely:
• Direct unsubsidized loans
• Direct subsidized loans
• Direct plus loans
• Direct consolidation loans
Direct unsubsidized loans
A student is qualified for this kind of student loan whether they can afford to pay their fees or not.
The terms and conditions for this loan is not too favorable for the student as he or she is responsible for paying of all the loan interest accrued on the loan.
Direct subsidized loans
If a student proves that he or she needs financial help then this loan is made available to them.
The United States department of education makes sure the interest on the student loan is paid whiles the student is still in school and also six months after the student graduates from school.
Direct plus loans
As a professional student or a graduate student you qualify for this type of loan.
If you are a parent to a dependent undergraduate student who wants to go in for trade school or college you can apply for such a loan.
However, you must have a credit history which is good or close to good.
Direct consolidation loans
Some students have more than one federal loans and will like to put all the loans together.
This type of federal student loan is right to do that because it combines all the loans into one for you to have one loan to service.
It is flexible and allows students up to thirty years to finish paying off the loan.
Try not to over borrow so that paying off the loan will be easy and also the interest will not be too much to cause you problems.
Four reasons why you should choose direct lender
When looking for a home you have two options, which is either you get the home through a broker or you go directly to a lender.
The differences have led to people choosing direct lenders because they get to speak to the lenders directly and their concerns are addressed.
Apart from this there are other advantages when you choose direct lenders.
These are stated below :
• Fees are lower
The truth is both mortgage or direct lenders will charge you for their services.
However when you choose mortgage broker you will end up paying more because you will pay the broker and then pay the lender too.
Why pay for twice when you can pay just one fee to the lender and get your money when your application is processed.
Dealing with a direct lender means you negotiate the rates and all other fees associated with the loan.
Whiles with a broker they will negotiate a deal that will make their payout a lot higher since they are paid a percentage of the whole amount of the loan.
This automatically means you are saddled with a much higher rate for your mortgage.
• Time saving
Every direct lender has staff (in house processing and underwriting) who attend to clients as swiftly as the applications come in.
This swift response to clients applications saves the client a lot of time.
• No unnecessary stages
You cut out all unnecessary steps that comes with using a broker because you communicate directly with the lender.
The broker who is the middle man between you and the lender has to do the liaising between you two.
So you send your files and information to the broker and he or she will then have to send these info and files or documents to the lender.
This is obviously a step that creates a longer process than if you were directly dealing with the lender.
• Very flexible
Mortgage brokers do not have staff that do underwriting and cannot make loan decisions on their own.
They need the help of others to be able to get that decision made.
So the documentation of the client and all other information must be sent to the lender for a decision to be made.
With a lender sometimes they can decide to relinquish some fees or papers which the broker cannot.
A direct lender can decide not to charge a client processing fee and also offer some discounts from their own discretion if they feel it will help the client.
All these flexible attributes can only be directly from a lender and not a broker.
With bad credit can I apply to direct lenders
Your credit report is equivalent to the black box in an aircraft because it contains all the information of your borrowing or credit history.
The period where you defaulted on your loans and periods where you were diligent with your payments.
All this information goes to show if you are creditworthy or not to a lender.
No lender will want to lend to a borrower who is considered high risk.
To be sure of a borrowers credit status the lender checks the credit history of the lender from a credit bureau.
If the borrower has a bad credit history the likelihood that the lender will reject the application of the borrower is high.
Having a good credit history helps lenders to give loans to borrowers without fear because they know the money will be paid back.
How to search for direct lenders
Before you go for a loan it will be best for you to do a lot of research on different lenders so that you will get the best deal that suits you.
Each lender has their way of operating as well as their terms and conditions plus their own rates and fees.
So researching on different lenders will give you an idea of what the lender is offering and if the lenders offers suits you.
Some lenders hide their charges in small prints so make sure to read and understand all the fees and charges that go with a loan before you apply for the loan.
Another good place to find out if a lender you have chosen is exactly who they are is the review section.
That is where you will find clients who have used their services either giving good reviews or bad reviews of them.
It is a good thing to consider the reviews because they give a fair idea of the lenders services.
The customer service of a lender also goes a long way to show if the lender cares for you or not.
If the customer service is crap then you can tell how the badly you will be treated by the lender.
How easy it is to understand the application form is a plus to the lender because it will make applying easy and faster.
A borrower can then give good reviews about the lender because of this service and this will help boost their rating online.
How fast is it to get money from direct lenders
Most people who go searching for a loan do so because they need money urgently.
The urgent need of the money will determine the kind of loan you will need.
Direct loans are very fast when it comes to approval of loans, so if you need money urgently, choose a direct lender.
You will avoid all the delays that comes with a broker and all charges that are associated with brokers.
When all checks have been done by a direct lender, the approval of the loan will take less than an hour.
Some lenders transfer the loan amount to the borrowers account within minutes of approval.
Direct lenders try as much as possible to get borrowers the money they apply for as soon as possible if approved because of the competition on the market.
There are so many irresponsible lenders around who are taking advantage of borrowers.
However responsible lenders will make it a point to explain everything about a loan to you so as to make a good decision.
On their websites it is clear from step one what to do and how to go about it.
If you find a direct lender that has a website that is difficult to understand, you must leave the website and find yourself another lender.
Some lenders do charge more when you need the loan faster than usual, this means you will pay more in terms of interest rate.
But that can just upset your budget so it will be in your interest to borrow from a responsible lender who will not charge exorbitant fees.
How do you know or find these direct lenders who are responsible?
It is quite difficult to fish out these responsible lenders, so a borrower must be extra careful when searching for direct lenders.
Especially when brokers are pretending to be direct lenders and misleading borrowers.
With that said if you are extremely careful and don’t fall for offers that are too good to be true you will be able to avoid scammers pretending to be direct lenders.
The way websites are built and its content is also a giveaway if a lender is responsible or not.
Look out for websites that are organized, clean and professional, if you do not find these attributes leave the page and continue your search.
Disclaimer: All loans offered through this website are subject to credit and underwriting approval. AfterLoans.ca is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations. Our lenders lend from $500-$5,000. Loans amortization is between 6-36 months. APRs range from 19.99% to 55%. The actual APR charged will depend on the lender’s assessment of your credit profile. For example, on a $1000 loan borrowed for 12 months at 29.9%, the monthly payment will be $97.24; with a total repayment, including interest, of $1166.88 There is also lender’s optional loan protection policy. In the event of a missed payment an insufficient funds fee of around 45$ may be charged (dependent on the lender). If you default on your loan payment plan the lender may terminate the plan and the remaining balance will become payable immediately. Our lenders employ fair debt collection practices, but will pursue the payment of Outstanding debts to the full extent that Canadian law allows.