All Of Your Direct Lender FAQs Answered

You may have a few questions about direct lending, which we will try to answer here. Many people seem to believe that direct lending is synonymous with payday loans, but that is not the case. A direct lender is simply a company that lends its own money, and that can mean an installment lender as well as a payday lender.

You can clear many of your doubts and have your queries answered by going over the direct lender FAQs below. 

Let Us Help You Answer All Of Your Direct Lender FAQs

If you’re thinking about a direct lender loan, it pays to know how they work. Read on as we try to answer some common direct lender FAQs.

Is a Direct Lender a Payday Lender?

Not always. Many direct lenders work differently through installment loans. With payday lenders, you have to pay off the entire principal plus interest in one transaction. This could be problematic. With an installment lender, you pay back the loan in scheduled installments, which can be easier to manage.

Is a Direct Lender a Legitimate Business?

Many are, but check before you apply. Find out whether the lender is licensed in your state, since borrowing from one that isn’t can cost you more than your state allows.

What Is a Direct Lender? What Does That Mean?

A direct lender lends you its own money. There is no go-between through which you have to reach the lender for loan approval. This can eliminate middleman costs, and approval can be faster with direct lenders.

Can I Improve My Credit Score with a Direct Lender?

It depends on the lender. Some direct lenders report your payments to all three credit bureaus, some report to only one, and some don’t report at all. If yours does report, timely payments can help build your credit history. This can be most useful if banks refuse loans on account of your credit score.

Most payday lenders don’t offer this, since they usually don’t report to credit bureaus. When on-time payments are reported, you’re letting credit bureaus know that you are responsible, and in turn, that can help your credit score.

Will I Be Trapped in a Debt Cycle?

That depends on the loan and your budget. A responsible lender will consider your financial scenario and won’t give you more than you can afford. Not every lender works this way, so do the math yourself and make sure the monthly payment is manageable. If the payment fits and you pay on time, you should be much less likely to have problems.

What Are the Minimum Requirements?

Minimum requirements vary by lender and by state. You will often need to fulfill the following.

• Be at least 18 years old
• Possess your own checking bank account
• Prove a verifiable income source
• Live in a state where the lender operates

Meeting the minimum requirements doesn’t mean you will be approved, and lenders may still run a credit check.

Are There Any Hidden Charges?

There shouldn’t be, but read the agreement to be sure. A reputable lender will explain all charges upfront. Look at the APR as well, since it includes both interest and fees.

Do Direct Lenders Approve Loans Quickly?

Many direct lenders approve loan applications far more quickly than banks, often in days rather than months. How fast you hear back and get your funds depends on the lender.

Is Loan Payment Easy?

With an e-payment service, loan payment can be very convenient. Many lenders let you authorize them to debit your account to pay the amount due each month. This way, you can pay on time with maximum convenience. Just make sure the money is in your account on the due date.

Finding The Help You Need

A direct lender isn’t automatically cheaper or better than any other lender, and a loan from one is still a debt you have to repay. Compare the total cost, check that the lender is licensed in your state, and make sure you can pay back the loan without the need to re-borrow.