If you have recently been looking for a loan, you may have come across the terms ‘direct lender’ and ‘broker’ as options for the process. Knowing what these options mean and the difference between the two will help you decide which route you should choose to find the loan you need.
What is a broker?
A broker is somebody who doesn’t physically lend you money but will assist you in finding the right company to borrow from. They are a third party person or company who can shop around for you to find a lender whose criteria you meet. A broker will consider your circumstances to find lenders that are likely to accept your application, meaning you won’t have to waste time filling out unnecessary forms.
Some brokers will charge a fee for their services, so it is important to check this beforehand. Others may be free of charge due to getting a commission from the lending company.
What are the benefits of using a broker?
Using a broker may be ideal if you don't have a wide range of knowledge about how to find the right loan. It can take away a lot of hassle as they can narrow down your borrowing options to the most suitable companies for you and your situation.
Another advantage is that most brokers only work with legitimate lending companies, meaning your personal information is kept safe. This takes away any worries about being a victim of fraud, especially online, where it can be difficult to know what is legitimate.
If you have less time on your hands and want to find your ideal loan as soon as possible, using a broker can quickly narrow down which options are available to you. They are experts in the field so you can be sure they won't waste time on companies that would reject you.
What is a direct lender?
The lender is the company or institution that will physically be giving you the loan, with the expectation of repayment under agreed-upon terms. There are different types of lenders, such as banks, personal loan companies, and credit unions. A direct lender deals with you one-to-one, which can speed up the process if you need a loan urgently.
What are the benefits of going directly through a lender?
By hunting for a loan on your own and directly contacting potential lenders, you will avoid any costs of using a broker.
This also means you can spend as long as you like researching different loan companies and looking for the ideal one. If you have more experience or confidence in the field, a broker may be unnecessary.
You can also get a loan much quicker by going directly to the company, so if you’re in a time-sensitive situation, it may speed up the process.
However, if you aren’t using a broker, this does mean you may need to spend longer ensuring you fully understand the terms and conditions of the loan you choose - before applying for it. Ensure you choose a company that has a good reputation and terms that suit your lifestyle, to avoid any complications or debt down the road.
If you are still unsure which route to choose, it may be worth speaking to a free broker for advice and seeing what they can offer you. This will allow you to weigh up your options. However, there isn’t a right or wrong answer - it all depends on your personal circumstances.
Making a bit of extra money can really help you save for those unexpected emergencies, but it isn’t always possible to plan for every expense. At Morses Club, we provide cash loans, sometimes referred to as doorstep loans, to help take care of those surprise costs. Doorstep loans aren’t right for everyone, so if you are considering it as an option, it is important you understand how it works before you apply.