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Secured and Unsecured Private Lenders in Canada

If you have a poor credit score, qualifying for loans can be quite a challenge. That’s where private lenders in Canada come in. Their private nature means they can skirt many of the restrictions that keep banks from lending to people in less-than-ideal financial shape. Keep reading to learn more about private lenders in Canada and how Loans Geeks helps you find the very best ones out there.

What are Private Lenders?

As you can probably tell based on the introduction, private lenders in Canada are non-banks that offer loans with less strict criteria than major banks like RBC or Scotiabank. Private lenders in Canada are not as beholden to the restrictions that govern larger institutions and can largely set their own rules for evaluating applications, which makes them friendlier to potential borrowers that have previously had trouble with banks. Many private lenders are fairly successful companies that lend out investor capital rather than consumer deposits as would be the case with a commercial bank under Canada’s fractional reserve system.

Now, private lenders in Canada aren’t offering a free lunch. Because they open themselves up to greater risk by stepping outside of the regulatory system that protects major banks, you can expect to pay higher interest rates depending on your credit score. Still, it is possible to find a reasonable private loan in Canada if your credit score is good but you’d just rather not work with a major bank for whatever reason.

What Types of Loans Can You Get from Private Lenders in Canada?

Most private lenders offer a wide variety of loans, including but not limited to:

Benefits of Working with Private Lenders in Canada

While we’ve mentioned a few perks so far, let’s take a closer look at why private lenders are quickly becoming a very popular means of financing everything from home repairs to debt repayments.

Convenience

The bank loan application process is a bureaucracy-ridden one. You have to fill out tons of paperwork and are often required to visit a branch with documentation detailing every aspect of your financial situation. Private lenders in Canada, on the other hand, typically offer a more streamlined process that is largely online. They may just have you fill out a quick online form detailing your work situation, run a credit check, and then make a decision within hours rather than the weeks-long process typically involved in getting a loan from your bank.

Personalization

Big banks don’t need your business. They rake in billions of dollars from a multitude of sources. As such, you’ll find them much more stringent about fitting you into one of their pre-existing loan categories, with all of the challenges that come with that. A private lender, on the other hand, is much more likely to work with you and craft an appropriate solution for your needs, including adjusting your payment schedule in times of difficulty.

Bank-Agnostic

What if you do all your banking with Institution A but Institution B is the only one that will approve you for a personal loan? Well, you’ll have to open up an account with Institution B and remember to transfer money from your other accounts in time to make payments. Most private lenders in Canada have their own portals or apps through which you can make payments regardless of which institution you bank with.

When Should You Consider a Private Lender in Canada?

There are a few reasons you might seek a private loan in Canada rather than one from a major bank. Let’s take a look.

Banks Won’t Approve You

Banks generally require a credit score of 650 or more to give you a loan. That minimum gives them plenty of customers since it’s also the average credit score in Canada. If your score is any lower than that, you’ll likely turn to private loan lenders in Canada next as they’re far more flexible regarding who they’ll lend to.

You Just Don’t Like Dealing with Banks

Banks can be annoying to deal with. You may constantly feel like you’re being upsold given the plethora of products they offer, among other gripes. Private lenders in Canada are very much worth considering as a simpler and friendlier alternative.

You’re Looking for Quick Approval

If your roof’s sprung a leak or you’re facing some other type of emergency, you don’t want to wait until the bank finishes processing your paperwork in five or more business days to find out if they’ll even give you a loan. A private lender can approve you and deliver the money within hours.

Where to Find Private Lenders in Canada

When looking for private money lenders in Canada, it’s particularly important that you conduct due diligence. At Loans Geeks, we’ve endeavoured to conduct most of the research you’ll ever need. We partner with only the most reputable private lenders in Canada, ensuring that you avoid issues. Our criteria include the following.

Appropriate Licensing

Just because a company is a private lender doesn’t mean it can go without being licensed. Even private lenders in Canada have rules they need to follow depending on what type of service they offer. Home loans, in particular, are tightly regulated at the federal level.

Good Business Practices

The private lenders we work with must adhere to good business practices. That means they must not engage in predatory practices such as rushing you to sign a loan agreement or recommending that you lie about your financial situation so they can legally give you a loan.

Reasonable Interest Rates

Private lenders in Canada should offer decent exchange rates. Yes, they’ll be higher than what you’d find at a bank but they should never be excessive, which is a clear warning sign.

These criteria ensure that you’ll never be preyed upon by the lenders we recommend. You’re in good hands!

Frequently Asked Questions

Are private lenders safe?

Good private lenders are every bit as safe as a bank. They adhere to the relevant regulations and do not engage in predatory practices. You’ll just pay a higher interest rate to compensate for the increased risk that private lenders take on by financing individuals who couldn’t get a loan from their bank.

How do I verify a private lender?

The verification process can be a bit challenging with private lenders in Canada since not all loan categories require registration with the federal government. Pretty much all private lenders in Canada will have a profile on the Better Business Bureau, however, so you should look them up there. The BBB website is particularly helpful for seeing what other customers have had to say about the lender as well as identifying whether the company has faced any recent legal action.

Are private lenders better than banks?

Private lenders can be the better choice if banks refuse to lend you money or you just don’t like dealing with them. If you have an excellent credit score, you might find a very reasonable rate at a private lender although they generally tailor their services to those with subpar scores.

Map of Canada

Richest Provinces in Canada

If you find yourself continually in financial trouble due to a lack of employment opportunities, you might consider moving to one of these richest Canadian provinces.

Alberta

Alberta’s GDP per capita is $78,154, making it by far the richest province in the nation. Alberta is a very oil-rich province, producing roughly 80% of the country’s supply.

Saskatchewan

Saskatchewan comes in second place with a GDP per capita of $70,654. Its source of wealth is uranium; Saskatchewan contains some of the world’s largest supplies.

Newfoundland and Labrador

Newfoundland and Labrador have a GDP per capita of $65,556, with much of their wealth consisting of service industries like finance and healthcare. Mining and fishing are two other big industries here.

Ontario

Ontario is Canada’s most populous province and has a GDP per capita of $48,971. Despite it coming in fourth, Ontario is considered the cultural and economic capital of Canada due to its containing Toronto, the nation’s most powerful city.

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The amount depends on many factors. In most cases, on your debt load, income, and few other factors.

You will always be able to get a secured personal loan against a collateral.

Payments will be deducted from the borrower’s bank account. The deduction can be arranged on weekly, semi-weekly, bi-weekly or on a monthly basis, depending on the agreed terms.

The overall duration of personal loans depends on the lender and the amount. Most service providers offer flexible repayment terms.

APR represents the annual percentage rate (interest rate). The annual interest depends on the loan, the service provider and the borrower. In most cases, the APR ranges between 10 and 40 percent.

Typically, the following documents should be present:

  • Employment verification status
  • Proof of income
  • Proof of residency
  • Should be at least 18 years of age
  • Proof of bank statements and account
  • Potential references
  • In most cases, borrowers with prior bankruptcy and debt consolidation counseling filing would not qualify.
  • If you have used payday loans extensively, you may not qualify.
  • If you make less than $1500 a month, you may not qualify.
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