What are Direct Lender Loans?

Published on April 30, 2021 by Daniel Azzoli

A red telephone in front of white background.

Looking for a lender to apply for a loan with can feel like a daunting task. With all of the potential options out there, it can be hard to know where to start. The first step in this process is to get a better understanding of some of the types of loan providers that are out there to help you make an informed decision.

But why focus on the lender at all? The specific type of personal loan you choose is obviously going to be an essential decision, but the type of lender you work with is a part of the borrowing experience that shouldn’t be overlooked.

To navigate your way through the borrowing process as smoothly as possible, you’ll need to make sure you’re up to date on the types of financial institutions that facilitate loans, as well as the types of loans that may be available to you. Today, we’re going to focus on one of the main types of loan providers, direct lenders. We’re also going to look at different types of direct lender loans that you might come across as you search for a borrowing option that suits your situation.

What is a Direct Lender?

A direct lender is a financial institution that provides consumers with loan products. Whether you’re looking for an installment loan or line of credit, a personal loans direct lender will be your single point of contact for the entire process. They’ll not only be your main point of contact, but they’ll also be the ones providing you with the funds you’re borrowing.

Direct lender loans customer service agent.

To help you understand what a personal loans or cash advance direct lender is, it may help to highlight what they are not. Simply put, they aren’t a lead provider, loan broker, or affiliate marketplace that will match you up with a loan or a loan provider.

When it comes to the specific parts of the process where you’ll be interacting with the direct lender, this can include:

  • The application process for a line of credit or other type of personal loan
  • Getting your money, assuming you’re approved
  • The repayment process

These can apply to both storefront lenders and online cash advance direct lenders.

How do Direct Lender Loans Work?

Whether you’re applying for a loan through a storefront or an online direct lender, this process starts with an application. If you’re looking for an online loan, you’ll find the application on the lender’s website, otherwise you’ll likely need to go to a storefront’s location during their hours of operation and fill out an application in person. When filling an application for an online loan, you can often start this process 24 hours a day, 7 days a week.

Either way, your application for direct lender loans will help a financial institution determine how reliable of a borrower you’ve been in the past and are likely to be moving forward. They generally do this by reviewing a variety of factors. They may take a look at your credit history and also pay close attention to your income and employment situation. These factors can vary between different financial institutions.

Before approving your loan application, they may need to verify the information you’ve provided. Once this is done and assuming you’re approved, you may receive your funds as soon as the same business day, but this will depend on the type of loan, the lender, your bank, and certain other factors.

The funds you’ve been approved for will generally be deposited directly into your bank account depending on the type of loan, and you may even be able to set automatic withdrawals from your account directly to the lender to help you to avoid missing any important payment dates.

Types of Direct Lender Loans

Direct lender loans can span a fairly broad number of loan types. There are plenty of financial products that can fall into this category.

Person researching direct lender loans on their laptop.

The types of loans that we’re going to focus on here are fairly common loan categories, which can be narrowed down into even more specific types of loans that are intended for specific uses. They can be used for things like emergency expenses, to help you buy a house, or to pay for your education. It all depends on the specific type of loan.

1. Personal Lines of Credit

A personal line of credit is a type of personal loan that allows you to draw money from a pre-determined credit limit on a revolving basis. This means that you can draw any amount of money up to your credit limit (assuming you have available credit and your account is in good standing), and as you pay back what you owe, you can then continue to draw more money.

Instead of being fixed to a particular amount of money that you receive in a lump sum, you can choose to withdraw as much or as little money as you need. This makes it a relatively flexible borrowing option.

2. Installment Loans

If you’re approved for a personal installment loan, you’ll be given a lump sum of cash which you’ll then need to repay along with interest and/or fees over the course of several equal and scheduled payments. The length of your repayment period can vary based on the type of installment loan and the lender, but it can range from a couple of months to several years.

Compared to certain other types of direct lender loans, there’s a wide range of uses and sizes for different types of installment loans. They can consist of loans like mortgages, which would likely be one of the biggest installment loans you’d ever apply for, and small-dollar direct lender loans that are meant to help you handle emergency expenses.

Potential Benefits of Direct Lender Loans Online

Like we’ve mentioned, direct lender loans can be found either through brick and mortar lenders or through financial institutions that provide loans online. There are some characteristics that may be unique to online loans, and you may find these types of loans are still accessible to you when you aren’t able to work a trip to a storefront lender into your schedule. While the specifics of the borrowing experience can vary between different financial institutions, here are some general benefits of online direct lender loans.

1. Direct Communication

When it comes to working with a direct lender, you have one central point of contact, making it easy to stay updated on your important account information and to get answers to any questions you may have.

Direct lender loans customer service agent on the phone.

2. Convenience

Like we said earlier, one of the biggest benefits of online direct lender loans is how convenient the process can be. You can apply from anywhere you have internet access, and in many cases, you’ll be able to start the application whenever it suits you. Whether you want to start an application, get your funds, check specific account details, or ask a question, all of it happens remotely.

3. Easy Lender Comparison

One of the most important steps in the entire borrowing process, and one that should be done before you submit an application, is to compare the different rates and terms of potential direct lender loans. The great thing about online loans is that this information is generally easily accessible on a financial institution’s website. All you need to do is do some simple research online, pull up the rates and terms of different lenders in different tabs on your browser, and compare the information in front of you.

4. Fast and Simple Application Process

When you’re facing an emergency expense and you need fast cash loans, the last thing you’re going to want to do is to go through a long and arduous application process. When it comes to online loans, an application can often be completed in just a few minutes, which can speed up the entire borrowing process.

Find a Loan that Suits Your Needs

Whenever you have an opportunity to find the best possible solution to a problem, you owe it to yourself to do what needs to be done to make that happen, right? After all, no one likes to settle for less than they deserve. Well, this definitely applies to your finances. The last thing you want to do is make a decision that could potentially harm your financial standing, so you owe it to yourself to seek out the best option for your situation.

When it comes to direct lender loans, there all sorts of specific financial products and different lenders that offer those products. Because of this, you’ll need to take the time to educate yourself on your potential options and find what suits your situation the best. And remember, don’t ever apply for a loan you can’t afford. If you don’t think you’ll be able to make your payments and still keep up with your regular expenses, you’ll want to look elsewhere. 

Disclaimer: This article provides general information only and does not constitute financial, legal or other professional advice. For full details, see CreditFresh’s Terms of Use.