Thinking of taking out a loan online via a broker? Don’t make the wrong move! Find out if a loan broker is right for you. Join Personal Loans Now as we explore some points you may not have considered.
- Ensure your online security
- Access to less well-known lenders
- Faster application procedure
- Reduce the impact on your credit score
- Presentation of all loan features
- Fitting the lender’s requirements
- Conclusion- Paying brokerage fees
Advantages of Using a Loan Broker
Once borrowers have weighed up their options and decided that they need a cheap short-term loan, they have two choices. They can either apply directly to the lender of their choice, or they can use the services of a loan broker. In this article, we explain the benefits of taking out a loan through a broker.
- Ensure your Online Security
- Access to Less Well-known Lenders
- Faster Application Procedure
- Reduce the Impact on your Credit Score
- Presentation of all Loan Features
- Fitting the Lender’s Requirements
One of our concerns when we apply for a loan online, is to make sure that the lender is genuine. Fraudsters are becoming increasingly sophisticated and even a professional-looking website could be a scam. Our personal data could be at risk leading us to become the victims of identity theft. Of course one of the precautions that you should always take is to check that the lender is approved by the FCA. There should be a registration number on the website which can be verified with the FCA’s Financial Services Register.
A big advantage of using a short term loan broker vs a direct lender is that your security is guaranteed. Not only do brokers build up long-standing relationships with lenders but they have also verified that they are legitimate professionals. You do not need to worry about the safety of your personal details as they will not be seen by anyone who is not on the Register.
Although over 30 lenders are offering short-term loans, only a handful of them are household names. Even if you use a search engine to find other lenders, the way that search engines operate means that the most popular or industry leaders will appear on the first page of the search. Although you could apply to one of these market leaders, they might not have the best financial product for your personal circumstances.
Short-term loan brokers are knowledgeable about their field of expertise. By using their services, you will have access to smaller or newer lenders that you might otherwise have missed on your online search. These might have a loan which is tailor-made to meet your needs.
Often time is precious when you apply for a short-term loan and you need the money as quickly as possible. However, you must balance this with the undeniable benefits of shopping around and really should not apply to the first lender you find. But, how many websites are you going to visit and is visiting a handful enough?
Every time you apply for credit, this leaves a footprint on your credit file as the lender checks your borrowing history. Too many credit checks in a short period of time give the impression that you are in desperate financial straits and results in a lower credit rating. One way to avoid this is to space out your credit applications, but will you have the time if you need to access a short-term loan?
This vicious circle of credit checks, loan rejections, a lower credit rating and more credit checks often occurs when borrowers are applying for a loan on their own. By contrast, using a loan broker can prevent the damage to your credit score as they use their experience of the marketplace to steer you in the right direction. This requires only one hard credit check and leaves your score virtually intact.
Having done your research before taking out a loan, you are probably familiar with the importance of the APR and how it represents the total cost of your borrowing including all fees. However, you might not be so familiar with all the other features of a loan or even know what to look out for. For instance, would it occur to you to check for late penalty charges or early payment fees?
When brokers present you with a list of loans which suit your borrowing requirements, all the loan features are presented on one page. This makes it much easier for you to compare the APR and all the loan features. In this way, you are more likely to find the lender who suits you.
In the same way that you have expectations of your financial product, lenders also have criteria for borrowers. This concerns their personal and financial circumstances. However, this is not always apparent even if you use a price comparison site. You might find the ideal loan provider on such as a site and then find that the APR you are offered when you apply is different to the one advertised. This is because the APR takes into account your own circumstances and how great a risk you represent to the lender.
Brokers are able to filter out all the lenders who would not approve your loan application, and this saves you time. This is especially important if you have a poor credit rating. Some lenders specialise in offering small personal loans to such borrowers, and a broker would be aware of this fact.
Brokers can be beneficial in that they facilitate the loan application process. One concern that consumers have is that they might have to pay the broker extortionate fees. This would add to the overall cost of their borrowing. Before you use a loan broker, they should be upfront about how to pay them. Many online brokers are free for the borrower but are paid in the form of commission they receive from the loan providers with whom they have developed a commercial relationship. If you have a concern, always ask about possible fees before starting the loan application.