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Private LoansPrivate loans are loans given to borrowers by private lenders.

A private lender is either an individual or an establishment that grants loans or gives money to individuals. These private loans however, are loans with high-interest rate as compared to loans gotten from traditional financial institutions or Banks.

Private lending is considered one of the oldest form of lending.  Private lenders are less rigorous in assessing loan applications, compared to the traditional financial institutions or banks. This makes it possible for a borrower to get a loan faster.

Quite a number of individuals, as well as families, need private loans once in a while. The only challenge individuals and families face is searching for lenders who can give private loans.


In some cases, these people or borrowers don’t even know or have an idea of private loans and end up using up all their credit on their credit cards and sometimes going overboard.

In other instances, borrowers who are aware of private loans also decide not to go for them because of the high-interest rates associated with private loans.

In order for a borrower to make decisions on whether to go for private loans or not, a borrower can get advice from other lenders as well as family and friends who have taken private loans before and how the private loan helped them.

Somethings to consider before going for a private loan

First and foremost do you really need the private loan 

This should be the first thought that should cross a borrowers mind.Taking private loans is a big deal and a borrower must not take it lightly. In as much as taking private loans can solve some financial issues for the borrower, it is advisable to consider the importance of the loan you are about to take as against the situation you are in.

If the situation is something that can be put aside or put on hold for a while so the borrower can work and later make payment, then taking private loans is not that important.

In other instances, the borrower can ask for loans from family and friends who sometimes don’t ask for interest on the loan given. Sometimes interest on loans given by family and friends, are much lower as compared to private loans from other lenders.

Analyze and make sure the interest rate mentioned is something you can afford considering your income 

Paying attention to the interest rate stated for a private loan is important.

The interest rate mentioned will eventually add up to the entire amount you are to pay to the lender as a borrower.
Making comparisons of interest rates from different private lenders will help a borrower make an informed choice. Since rates differ from lender to lender, comparing them will help a borrower choose the lowest among the rates.

Lenders are very smart when it comes to hidden charges. A borrower should be aware of these hidden charges and scrutinize the loan agreement properly.
Such hidden charges are :

Administration fees
Credit report fees
Underwriting fees
Processing fees and
Origination fees

Note that these fees are not calculated as interest rates but added to the amount the borrower pays every month.
With this kind of fees, it will be better if a borrower chooses a loan with an interest rate that is somewhat higher than choosing a lower one but having monthly installments being higher because of the fees.

Estimate the tenure of the private loan and decide how long will be favourable to you

Normally private loans are given tenures from twelve months to sixty months mainly when it comes to personal loans. It is prudent to know that the longer the tenure of the loan the more a borrower will pay.

Discussing your tenure with your lender is very necessary. This can be done using your income or using your capabilities as a borrower.
Also, the amount of money needed by the borrower is also an important factor in determining the length or tenure of the loan.

A lender giving a private loan to a borrower will also consider if the tenure requested by the borrower favours them. This is because private lenders don’t ask for any kind of collateral so giving out loans is a risk being taken by them.

One thing a borrower must be aware of is that, when a loan is given and a tenure agreed on, a borrower can pay back the loan if he or she gets the means to.
Lenders have given borrowers the chance to pay back loans earlier than agreed. However, the borrower is mandated to pay a fee for abrogating the agreement.

This amount is called prepayment penalty and differs from lender to lender. A borrower should always ask about prepayment penalty fees on private loans.
Some can be really high, so it’s worth knowing about, just in case it comes in handy.

Take into consideration your current situation and weigh if you will be able to afford the monthly payments

The decision solely lies with you the borrower. Borrowers monthly and yearly budgets have to be well analyzed to make sure they can meet the repayments requirements. If these budgets are already ‘overbooked’ as a borrower you must make a conscious effort not to overstretch it.

Another option is to check from a credit bureau if you have a good credit history. Having a good credit report helps to bargain for better loans whereas the opposite renders you ‘powerless’ at the negotiating table. Sometimes having other responsibilities can block your chance from going for private loans.

The right thing to do will be to work out your other responsibilities and get them sorted before going for privates loans because it will add up to your financial burdens.

Why borrowers choose private loans

We all know the traditional banks and financial institutions give loans which are much trusted in the financial industry.
Borrowers have relied on these institutions for years, however, this trend has begun to change due to the fact that the traditional banks have increased their requirements.

Requirements by the traditional banks have become extremely difficult for borrowers to keep up with.
And borrowers now need loans much faster and also tailored to their specific needs. This has given the chance for alternative lenders to gain access into the financial market.

Lenders who give private loans are not restricted by regulations of the federal state, hence lenders find their own ways and means of working out their risk.
Determining whether a borrower is eligible for a private loan is solely their prerogative.

Private Loans Applications Are Fast

Going through applications processes are much faster and quicker, hence borrowers find private lenders more convenient for their needs.

Banks are mostly giving out loans at lower interest rates but borrowers still prefer private loans because having a good credit history is requisite for the banks to give a borrower a loan. Whereas private lenders grant private loans to people with both good and bad credit history.

A loan processing at a bank can take as long as two months or sometimes longer if your documentations sent are in question.
Imagine needing the loan as fast as possible to sort out a financial problem. The stress associated with getting a loan from a traditional bank is completely cut out by the private lenders who give private loans as quickly as possible.

Where to go for private loans

Online is the best way to look for private lenders since there are a lot of them online willing to give private loans to borrowers.
Searching for lenders that give private loans is becoming risky by the day.

There are people on the internet who have made it their job to dupe people of their monies as well as steal peoples identities for fraudulent use.
Borrowers before going online must be aware of these scammers online so as to be extra careful not to fall victims.

When online make sure not to give out your personal details easily to these lenders. Investigate their background properly before giving off any information about yourself to them. These and other factors have made it difficult to search for lenders who are genuine.

Private Loans Infographic

Are Online Lenders Genuine?

With that said there are so many lenders online who are genuine and willing to give borrowers the money they need. Borrowers just have to be careful and smart with their choices online. Borrowers must know that even genuine lenders are in the business to make money, so might come up with ways to do so.

As a borrower, you also have the right to choose a lender who will give you private loans that has rates and conditions that will need your specific needs.
Before choosing a lender that will grant you private loans, make sure the lender is a reputable lender.

Compare the rates with others online to be sure you aren’t piling up debt. After you have done all these investigations, you can choose a lender that meets all your requirements to give you the private loans.

Private loans are given by friends and family

Getting money from family and friends is a form of private loans.

Money can cause problems between family and friends, so deciding to go this path a borrower must be sure the money will be paid back as agreed.
Borrowing between family and friends have been quite common in recent years and most private loans are given to family and friends to use as they please.

However these private loans are mostly taken to purchase houses, sometimes start up new businesses, to support oneself whiles job searching, buy a new car etc. The private loans given to family and friends have more flexible payments schedules that are not official.

Money borrowed mostly has no interest attached to it and most at times, the borrower gets what he or she requested for.

When you have a personal relationship with someone and the issue of money gets in the mix, it can easily marr the relationship you have with the person. This is the downside of getting private loans from family and friends.

Respect Private Loans that are given by friends and family

In some cases, the agreement made during borrowing from family friends strengthens the trust whiles other times the relationship is marred forever.
To be able to do this private loans given by family and friends, you being a borrower must transfer the same kind of seriousness and respect that you will attach to private loans taken from outside. Outside refers to a bank, credit unions, or other financial institutions.

An agreement known as the promissory note is signed by both parties.

This is to put some legal dimension to the money borrowed. This includes terms and conditions as well as how much the borrower is to pay till the private loans are fully paid for.

Is it necessary to sign an agreement for private loans from family and friends?

The exciting trait about private loans from friends and family is that all the processes attached to loan acquisition from banks and other financial institutions are not relevant. Private loans given by family and friends normally don’t have any signed agreement. The lender assumes the borrower is well known therefore no need to have any signed document.

What is normally done is that the lender and borrower agree on the terms and conditions by word of mouth.
What matters, in this case, is the lender (family or friend) accepting to give you the loan. This oral agreement is what stands in place of any signed agreement. An oral agreement can easily be broken.

This kind of agreement between friends and families has backfired several times.

Signing a promissory note assures the lender, you the borrower is serious about the loan and also the lender can take the borrower on when there is a default.
Knowing the lender should not give a borrower the right to go back on the agreements because all agreements still stand just like it would with a loan from a bank.

However, if the borrower gets a loan from a family or friend, he or she owes it to him or herself to go by the agreement signed.
If not only will the relationship be broken but the borrower in question will block the chance of other friends or family who might need the help of the lender in the future.

Considerations before going for private loans from family and friends

Familiarity is said to breed contempt, therefore signing an agreement between a borrower who is family or a friend is sometimes not the best decision a lender can take.

It is a good thing for both parties because, in the case of the borrower, he or she will be forced to go by the agreed ‘contract’. In the case of the lender too, the borrower will be protected from the lender changing his or her mind in the agreement.

With that said, when a loan is taken from friends and family, unexpected things may happen during the time agreed for payments to be made.
It will be best if you keep the ‘lender’ informed of the situation. Not to take advantage but to keep him or her updated so when it’s time for payment it will not look like the agreement is being overlooked.

Ensure You Keep Your Relationship Before And After The Private Loan.

Private Loans

Remember before the loan you had a relationship with the lender and after the loan, there should be a relationship.
Keep that in mind when going for private loans from family and friends.

Before going for private loans from family and friends make sure to approach the whole deal as a business deal. Get all necessary documentation ready for just in case they ask for it. Example and one important document is your credit report.

When discussing loan amount and repayments, keep an open mind and be considerate not taking advantage of the friend or family member. This might just earn you a free pass in the interest rate or a very low-interest rate. Be flexible.

Make sure not to abuse the relationship you have with the lender. Try as much as possible to go by the agreements both of you settled on.

Pros and Cons of private loans

Pros :

Easy to get – Borrowers don’t need to fill a whole lot of documents for private loans. The information needed by these private lenders are mainly a borrower’s basic information such as name, address, telephone number etc.

No collateral needed – Private loans are mostly loans given without collateral or with no guarantee.
When a lender decides to give borrowers private loans, the lenders are aware of the risk involved therefore have made provisions for the risk involved. And this can be seen in the interest rates charged.

Credit history bad or good doesn’t matter – Having a bad credit history doesn’t affect you acquiring private loans from lenders.
Borrowers with bad credit history can now breath a sigh of relief. With a good credit history, a borrower can bargain for a better interest rate.

Terms and conditions are flexible – With private lenders, you can negotiate most of the terms and conditions especially with a good credit history. The interest rates can also be negotiated with private loans.

Getting a loan at the fastest possible time – The processing period is quick comparing it to that of the traditional banks and financial institutions.
Whiles the banks and financial institutions can grant a loan between 2 or 3 months, borrowers get private loans within weeks.

Private loans are cheaper than credit cards – Credit cards have much higher rates as compared to private loans.

Cons :

High-interest rates – The interest that comes with private loans is very high as compared to the traditional banks and other financial institutions. This high interest on private loans is due to the fact that there is no collateral attached to the loans.

Minimized control from the federal government – Because the lenders are fully in charge of their business, that is lending the government may know of their existence but do not have control over their dealings.

Consequences when payments are missed – Agreements with regards to private loans must be adhered to. Missing out on payments when the time is due can cost borrowers more as it will be considered as a breach of contract.

Early payment – this allowed for private loans but at a very high charge. It varies from lender to lender, therefore a borrower must make sure the lender chosen will have a considerable charge for loans paid earlier than agreed.

Long-term – Most private loans are long-term and borrowers are bound to this loan agreement until everything is paid up.


Everyone needs a loan at a point in our lives. The decision to actually go for the loan is where it differs individually, as well as what type of loan to go for.
A borrower going for private loans may have thought of all the pros and cons of private loans.

Private loans help us meet some financial obligations at the shortest possible time. After Loans Canada is here to help you meet your financial obligations.

Going for private loans from lenders who have your best interest at heart can be the best decision a borrower can take in his or her financial life. The same way choosing a lender who is just there to rip you off can make you regret your decision of ever going for a loan in the first place.

It is therefore very necessary to be extremely careful when going for private loans. As a borrower, make sure all your boxes ticked with regards to your requirements.

If a lender does not meet your requirement, move on to the next and the next until you come in contact with a lender that meets all your needs.
By meeting your needs, a lender’s requirements must be easy for you to meet. Make sure the interest rates and  terms and conditions are something you know you can comply by.

If not don’t be coerced into going for private loans that will end up being a burden instead of relieving you of your financial burden.

Disclaimer: All loans offered through this website are subject to credit and underwriting approval. is a lead referral company, not a lender. AfterLoans only works with financial service providers that adhere to Canadian laws and regulations.You can borrow up to $20000. 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.