These days, the craze for short term and payday loans is increasing a lot. Due to this demand, many lenders are popping up all over the world, but most of the people don’t know the real difference between a broker and a direct lender. If you are looking to borrow some amount of money for short period to get over your financial problems then this article is for you.
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Direct lenders
A direct lender offers you loan directly. That is, you have to apply to that lender only. The lender will review the application against the essential list criteria. In case, you will be able to make a grade, then they will lend you funds as you applied.
Reasons to choose direct lenders
- Many people prefer direct lender instead of a broker because they can have an idea of exact lender with whom they are dealing.
- Also, the application process with a direct lender will be simple and straight forward.
- Few people opt for direct lenders, while others choose brokers, but to make a decision you have to know about the benefits as well as drawbacks of direct lenders and brokers.
Benefits
- One of the main benefits with direct lenders is simplicity. Meaning you have to make application to a particular lender, paid amount by them and make repayments for them. So, it is simple to keep a track of communication
- No veiled charges
- Regulated by FCA to avoid inequitable lending
- Easy, fast and convenient process
Drawbacks
- Takes more time to find direct lenders
- Difficult to get lenders to lend for people with poor credit ratings
- May or may not offer required amount that you need
Brokers may be a company, which you apply for, and it will process your application on behalf of you to various partners. Usually, they will have lenders panel that is they will send the application to those lenders until one accept your application.
Once you make an application with a company, they tender it to the lenders, who bid on the application to offer loan to that particular person. With this, you can choose the lender who offers the best deal.
Reasons to choose brokers
- People with poor credit ratings can also get loan quickly
- Can apply for multiple lenders once
Benefits
- The main benefit with brokers is time-efficiency. That is, your application will be reviewed as well as processed through multiple lenders
- You can find the best lender without doing research
- Moreover, more enquires on the credit report can decrease your score. By using brokers you can experience not only faster process but also increase credit score as well
Drawback
- May have high rate of interest based on the brokers
- May take more time for application to get accept
- You will not have the freedom to choose a particular lender
Do your own research and gather information about the direct money lenders or brokers. Finally, choose the best option depending on your preferences that meet your financial requirement.
