CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78.1% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
US English

What is direct finance?

Direct finance


This is when somebody borrows money directly from the financial markets, instead of using an intermediary or third-party service. This is usually done to avoid high borrowing costs of indirect finance, where interest rates can raise the overall cost of loans.

Where have you heard about direct finance?

You may have come across this concept if you have ever bought a government-issued bond in its original form, even if you used a broker, as the price wouldn't have been increased by the associated interest rates.

What you need to know about direct finance.

Most borrowers who use direct finance will usually do so to avoid the high interest rates associated with indirect lending, for example, borrowing money from a bank. One way of doing this is by selling securities or shares to raise funds. This is to avoid a situation where a lender borrows money at a certain rate of interest, before loaning it to a borrower at a higher rate.

Find out more about direct finance.

The opposite of direct finance is indirect finance - find out more with our guide here.

Latest video

Latest Articles

View all articles

Still looking for a broker you can trust?

Join the 610,000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading