Best 3 Private Lenders for Personal Loans in Canada

It’s time to talk about private lenders. Nothing kills your vibe quite like an unexpected expense or a big purchase you can’t avoid. Then you have to apply for a personal loan from your bank and play phone tag for weeks, assuming you have good enough credit to qualify. If you don’t, well, you know how that story goes. If you’re tired of the rigamarole only to have the bank say no, private lenders can hook you up with the financing you need when you need it. They get a bad rap for having higher interest rates, but that’s not always the case. Private lenders offer fast service, flexible loan terms, and are bad-credit friendly. If you need to borrow outside the bank, here are the best private lenders for personal loans in Canada.??

What is a private lender?

?In Canada, a private lender is an individual or company that provides loans and financing options outside the traditional banking system. That’s a big deal because sometimes banks can be real sticklers about who they lend to. But with private lenders, you can get a more customized loan better suited to your individual situation.?

Why are private lenders important?

I don’t know who needs to hear this but, bad credit is not a moral failing. The ability to get a loan from your bank with a great interest rate is, quite frankly, a privilege. There a many reasons why a hardworking and honest person might not qualify for traditional lending. And financial trauma can happen to anyone from any walk of life. Credit-challenged people and those in unusual financial circumstances have exceedingly few lending options.?

That’s why private lenders are so important. They provide access to credit for millions of people who do not fit perfectly inside the eligibility boxes of traditional lenders. For example, without private lenders, it would be almost impossible to repair your credit score. People who are self-employed almost always have a harder time accessing credit, regardless of their credit score.

Why do private lenders charge such high interest rates??

While it might seem predatory, and sometimes downright immoral, they’re not actually trying to bleed you dry out of greed. There are a few specific reasons private lenders might charge very high interest rates, such as:?

Cost of doing business

Many private lenders charge high interest rates because they often borrow from the money market themselves to fund their loans. The money market is a financial marketplace where banks, corporations, and other institutions lend and borrow short-term funds.

Private lenders typically do not have deposit accounts like traditional banks, so they must borrow funds from the money market or other sources in order to have capital available for lending. The interest rates charged by the money market can be quite high, which then gets passed on to borrowers in the form of higher interest rates.

In addition, private lenders may also need to pay higher fees for loan servicing and other administrative costs compared to larger banks or financial institutions. These costs are factored into the interest rate charged to borrowers.

Increased risk?

Most private lenders offer loans to borrowers who may not qualify for bank loans due to poor credit scores, limited financial history, or other factors that make them higher risk for lending. To compensate for this increased risk, private lenders charge higher interest rates and fees.

Smaller loan volumes

Private lenders often work with smaller loan volumes than banks or other traditional lending institutions. This means that they cannot spread the costs of administering the loan over a large portfolio of loans like traditional lenders can. As a result, they need to charge higher interest rates in order to cover their operating costs and generate a profit.

Shorter loan terms

Private loans tend to have shorter repayment periods than traditional bank loans, which means that private lenders have less time to earn interest on the loan amount. To make up for this loss of potential income, they charge higher interest rates.

Best private lenders in Canada

If you need a personal loan, there are many private lenders that offer flexible terms and competitive rates. We’ve compiled a list of the best private lenders for personal loans in Canada. These lenders offer a range of loan amounts, interest rates, and repayment terms to suit your needs.?

Whether you’re looking to consolidate debt, cover unexpected expenses, or finance a major purchase (like a car), these private lenders can help you get the funds you need with minimal hassle. You can also use our personal loans comparison tool to help you find the right fit for you.

1. goPeer

Amount: $1,000 – $35,000 Rate: 8% – 54% Term: 1 – 5 years Minimum credit score: 600

goPeer is a direct peer-to-peer lending platform that connects Canadian borrowers with Canadian investors who want to earn interest on their money. Unlike traditional lenders, goPeer does not rely on credit scores alone to determine eligibility.

Instead, the company takes into account a range of factors like your income, employment status, and debt-to-income ratio. To apply for a loan with goPeer, you must complete an online application form and provide information about your financial situation. Once the application is submitted, it is reviewed by a lending specialist and assigned a risk rating. This rating determines the interest rate and loan amount that you are eligible for.?

If approved, your loan request is listed on the goPeer platform where individual investors can review your profile (don’t worry, they can’t see your personal info!) and choose to invest in all or part of your loan. Once enough investors have committed funds to your loan, it is deposited directly into your bank account. You then make regular payments back to goPeer until the loan is fully repaid.?

2. Fairstone

Amount: $500 – $60,000 Rate: 26.99% – 39.99% Term: 6 months – 10 years

Fairstone is a Canadian private lender that specializes in a variety of credit solutions. The company offers a range of loan products including secured and unsecured personal loans, home equity loans, car loans, debt consolidation loans, and more.

You can apply for a loan in person at a local branch or on the Fairstone website. The application process involves both completing an online form and speaking with a lending specialist to assess your needs and application. You will need to provide information about your financial situation, employment status, and credit history. If approved, funds are either directly deposited into your account within 24-48 hours, or given to you by cheque, your choice.

3. Car Loans Canada

Amount: Based on Black Book Value Rate: 6.99% and up Term: 1 – 8 years Not available in: QC, NWT, NT, YK

If you need to buy a car, Car Loans Canada is an online platform that gives you access to multiple financing options in one place. By connecting you with a wide range of lenders and dealerships across the country, you can find competitive rates and loan terms that fit your needs.

They work with all credit scores, the application process takes 2 minutes, and you can get a pre-approval without hurting your credit score.

The website also offers educational resources to help you make an informed decision about your car purchase, including guides on budgeting for a new vehicle, understanding interest rates, and navigating the car loan application process.

This article is the shortened version of an article originally published on Hardbacon.ca by Heidi Unrau under the title "Best Private Lenders for Personal Loans in Canada".