If you’ve been thinking about completing a secured loan application for any purpose, this is a question you need to consider.
In terms of basic logistics, brokers don’t actually lend any money to their clients. They simply shop around for the best deal on the market and point them in the right direction. By contrast, lenders hold the funds that the applicant intends to access. Ultimately, it’s the lender who decides whether or not a prospective borrower is eligible.
But which of the two is for you? Assuming both options are available, would you be better off working with a broker, or taking your business directly to a lender?
Borrowing Money via a Broker
Working with a broker is essentially like hiring a third party to do most of the hard work on your behalf. If you’re looking to find the lowest bridging loan rates in the UK, a broker can find them for you. If you need to find a lender that offers poor-credit loans for any purpose, the same applies. Essentially, a broker will read, review and match your requirements with whichever lender and loan they believe to be most suitable.
If you have neither the time nor the inclination to compare hundreds of loans from dozens of lenders, the services of a broker could be a godsend. Not only this, but brokers often provide privileged access to an extensive network of high-quality lenders that are not present on the UK High Street. The more loans and lenders you consider, the more likely it is you’ll find your perfect deal.
It’s also worth remembering that most brokers are 100 per cent independent, with no direct brand ties or affiliations. Hence, they’ve nothing to gain by telling you anything but the truth and providing objective advice from start to finish.
All well and good, but what’s the catch?
It depends on the broker you work with. Some brokers charge a set fee for their services, in accordance with the size and nature of the loan. Others don’t charge a penny, but are instead handed a commission by the lenders themselves. In any case, fees are usually only payable in the event that a deal is agreed and a loan taken out. If the client decides to back out at any time, there are no fees or charges involved.
Borrowing Money from a Loan Company
On the flip side of the coin, there will always be those who prefer taking their business directly to the lenders themselves. For many, it’s the reassurance that comes with communicating and dealing directly with the lender, rather than involving a middleman. There’s also the argument that working directly with a lender means completely eliminating the prospect of brokers’ fees and commissions.
Much as borrowing directly from a loan company can be convenient and reassuring, it rarely grants access to the best deals on the market. Borrowing from a loan company means being offered whatever kinds of deals they consider to be competitive at the time. You may get a good deal, but could you be sure you wouldn’t get a better deal elsewhere?
Broker Vs. Lender: Which is Best?
Just as long as you get a deal you’re happy with, it really doesn’t matter which way you go. However, working with a broker almost always guarantees a better deal. From interest rates to borrowing costs, to the flexibility of the loan agreement, freedom of choice really is everything. The more loans and lenders you consider, the easier it becomes to find an unbeatable deal.
The one proviso is to ensure that not only is the lender genuinely independent, but that they work in accordance with a fair and agreeable fee structure. Consider all borrowing costs and potential levies before submitting your application.
Article by iConquer