If you want to borrow money and you conduct a quick online search, chances are that it will bring up a number of options that include both direct lenders and credit brokers. For instance, you can find direct lenders for your online loans with iPaydayLoans or apply to a direct lender(s) yourself.
However, not everyone is familiar with the difference between the two and even if they are, they may not know which one is best suited to them over the other. So, we’re going to quickly break down each one in detail, so that you make a well-informed decision the next time you intend on applying for an online loan.
What Are Loan Brokers?
A credit broker is essentially a business that acts as an intermediary between a borrower and a direct lender. These loan broker services usually consist of a network of direct lenders, so you can effectively send one loan application through them, instead of applying to several different lenders one at a time.
In this respect, credit brokers do not lend money themselves. They also don’t have any influence in regard to the approval of loan applications. They are simply a convenient way to find multiple lenders, browse their offers and choose the one that is best suited to you. Furthermore, most loan broker services such as iPaydayLoans, for example, are free to use and they only conduct soft credit checks to present you with a list of potential lenders that are available to you.
They will then match you with their network of lenders and you can decide from where you will proceed to borrow the money. Once you choose a lender, you will follow the link to their website to complete the loan application, at which point, the lender will transfer the funds if approved.
Benefits of Using A Loan Broker
There are a few main advantages to using a loan broker as you look to secure yourself a loan. Some of these include;
Quickly Locate A Reliable Lender
The benefit of using a broker is that it can allow you to save a fair amount of time. Instead of applying to multiple lenders and hoping for the best, you can simply use a loan broker to submit one application which will then provide you with a list of suitable lenders that are more than likely to approve your loan request.
It also saves you a lot of hassle in trying to find a reliable and trustworthy lender since most broker services will usually vet the lenders that they partner with.
No Hard Credit Checks
Unlike applying with a direct lender, loan brokers do not conduct hard credit checks when you apply for a loan. In most cases, a broker named iPaydayLoans has a panel of direct lenders who will usually conduct a soft credit check, which does not have any negative impact on your credit score. If you want to know more about no credit check loans, Jean Santiago author of iPaydayLoans might give you more hints on its website.
This is in contrast to applying to a direct lender who will normally conduct hard credit checks that will end up lowering your credit score. And the more lenders you apply to directly, the more damage you will put on your credit rating, which can make it difficult for you to get a line of credit over the subsequent weeks or even longer.
Secure A Suitable Loan
The good thing about using a loan broker is that they tend to work with an extensive network of lenders and most of them are usually able to offer a wide variety of loan products.
From payday loans to bad credit loans to personal loans to installment loans, there are so many different lines of credit that you can access with the right loan broker. An added benefit is that you are less likely to take out the wrong type of loan, which reduces the risk of falling into a cycle of bad debt.
What Do Direct Lenders Do?
A direct lender is essentially a loan provider that you enter into a legal financial agreement with. In essence, they will be the ones that lend you money directly without any third parties involved in the matter.
Unlike loan brokers, they are responsible for conducting credit and affordability checks, they have complete control over how much you can borrow and what the lending rates/fees will be, as well as whether or not you will qualify for funding.
If the lender approves an application, they will usually get their underwriters to process the loan request, send over a credit agreement and once it is signed, they will transfer the funds directly into your checking account. This makes it the more convenient and speedy option for borrowers that are in need of cash to deal with an unexpected emergency.
However, you should bear in mind that opting to use a direct lender means that you will need to find them yourself and this can be difficult, especially if you have a bad credit score. On top of that, the online lending market is extremely saturated, which means that the responsibility of pinpointing an honest and legitimate lender falls on your shoulders.
As such, if you do decide to go starlight to a direct lender, you need to conduct a fair amount of due diligence to ensure that they are the right choice and that they are in the best position to give you a good deal.
Advantages of Selecting A Direct Lender
If you are considering using a direct lender, there are a few key benefits that this option can offer you over using a loan broker. These include;
No Middleman
The good thing about working with a direct lender yourself is that there is no need to deal with any middlemen. Some loan brokers can end up charging you an origination or application fee, but if you reach out to a lender yourself, you can often save yourself a fair amount in potential costs.
Faster Loan Processing
If you find yourself in a financial emergency, the benefit of working with a direct lender is that you can save yourself a lot of time and secure the funding you need as soon as possible. With no intermediary to work your way through, you can simply submit your loan application and if approved, wait for your funds to be deposited into your account.
Better Data Protection
One of the risks of using a loan broker is that some of these companies can potentially collect your personal information and use it for marketing purposes. After all, it is not uncommon to find yourself being spammed with emails and texts after submitting a loan request.
However, if you use a direct lender, your information will not be passed around from company to company, which means there will be less sharing of your confidential information and less risk of it being used in that manner.
Should I Use A Loan Broker or A Direct Lender?
Whether you decide to use a loan broker or work directly with a lender will usually come down to your personal preference.
If you find yourself short on time and need an urgent cash loan, then reaching out to a direct lender is a viable path to consider. However, if you want to secure the best possible deal for yourself and reduce the risk of falling victim to predatory lending practices, then using a loan broker like iPaydayLoans is the best choice.
Either way, whichever option you decide to use, you should make sure that you only ever agree to a loan if you are confident that you can afford to repay it on time.
