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The Difference Between Direct Lenders and Brokers

06 December 2022

When choosing a lender, there are distinct differences in terms of how they can help you online. Whilst some can lend money directly others will forward your details to other lenders that may be available to you also.

Here at QuidMarket, we are a direct lender, which means we make our own lending decisions and lend our own money. This differs from a credit broker.

Below we’ll explain how a direct lender like ourselves differs from credit broker loans you may find online. This should help you make an informed decision if you ever need a short term loan to help you.

Direct Lenders

A direct lender is a finance company that has control over how much it can lend, makes its own decisions and provides customers with a ‘direct’ application process. For each application they receive, they will review and decide to lend their own money. Direct lenders can provide many different types of loans, with some of the most common being high street banks. Whether you are needing a mortgage, personal loan, secured loan or form of cash loan, a direct lender can provide a self-contained process.

When a borrower finds a direct lender online, they know they can choose a loan amount and repayment term and apply quickly. Many direct lenders can provide a quick ‘decision in principle’ before performing credit and affordability checks. If they can approve an application, they have their own team of underwriters who will process the loan, send a credit agreement for signing, and then transfer the loan funds directly to a bank account. This all-in-one approach is convenient and fast for borrowers, especially in emergencies.

If you are someone with a low credit rating, a direct lender for bad credit can be a suitable option for some. Finding a direct lender that can help you will depend on your circumstances, as some will use automated lending decisions. This means you may be declined for having a poor credit history if not suitable for their criteria. This has to be considered before applying to any particular direct lender.

Credit Brokers

Unlike a direct lender, a credit broker application will show you available options to choose from other lenders. Many credit brokers do not lend themselves and they also do not approve applications. They are a convenient way to browse multiple options with one application, and then choose the most suitable one for you.

When using a credit broker, you’ll need to agree to their terms of service. Many are free to use and will only require a soft check of your credit file to see your potential available lenders. The credit broker will match you to their panel of lenders who they work alongside, acting as a referral point to them. This means they may charge a broker fee or receive a referral fee from the lender they introduce you to. This fee may be passed onto the borrower, so you would need to agree to these terms before proceeding.

Once you have browsed the broker loans available, you would then choose one to continue your application with. Usually, this will involve following the link to the lender’s website and then finishing your application. The lender you choose will then run credit and affordability checks and make a decision, transferring the funds if approved. For customers who want to see multiple options in one place, a credit broker can be a useful online tool to assess different direct lenders.

What Differences are there for me?

For borrowers, how can you decide between a direct lender or credit broker? Here are some of the main differences to be aware of:

As with all types of lenders or brokers, you’ll want to ensure you only apply through those authorised by the Financial Conduct Authority (FCA). You’ll also want to check before applying whether the finance company is a credit broker or direct lender too so that you are clear on what the process will be. If you are seeking a payday loan directly, you’ll want to find those that make clear they are payday lenders not brokers, so that you’ll know you won’t be referred.

Applying Online for Short Term Funds

Whilst with a credit broker you will see multiple lender offers, this will not provide you with all available options online. It will show you a selection from a broker’s panel of lenders, those who it has a partnership with, so you may miss other options available to you. To get a full view of loans you may be eligible for, it can be better to compare loans between direct lenders yourself. This may take longer to do but will potentially provide more options overall than a credit broker can offer.

It’s important to compare lenders so that you can make the best decision for your finances. Whether you use a credit broker or a direct lender for bad credit, you should always carefully read the terms and ensure the loan is affordable for you before applying.

We make this simple to do when using our loan calculator. You can enter the loan amount you require for a short term cash loan, choose the repayment term, and see how much a loan may cost. There are no hidden fees, and we can provide a quick process online to get the cash you require in an emergency.

Click apply now to start an application online if you need a loan today. For more helpful information regarding your finances, please visit Money Helper.

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