It is ok for spamming if your castle is getting attack, since it is a very powerful unit that only costs 2 turns (They kind of act like minutemen for castles.
1. slow movement. They are very slow, a knight or hussar would make it to a battlefield much faster. Obviously wagons help with this.
2. strength. They are strong, but not that strong. 2 upgraded heavy knights could easily dispatch a disbanded knight.
3. Cost. Yes, disbanded knights are cheap. But let's say, you need one for 10 turns. 5 turns to get to the battlefield, and 5 turns of fighting time. That means you need to boost it up with 4 money lenders as soon as it is created. This means that you spent 10 turns of production time on one disbanded knight, and that's just to fight for 10 turns! At this rate, you might as well just be training elephants or spartans.
My solution: Make money lenders give them 5 turns of (leaving). This would make them a possibly usable unit, at least.