Bank finance articles and tips

There are two types of lenders in the loan market - direct lenders and finance brokers. Finance brokers do not lend money; instead they match lenders with potential borrowers. Brokers will have access to several lenders and many different loan products. Direct lenders on the other hand do lend money directly, cutting out any middleman and handling the whole loan process from start to finish.

So, when you need a loan do you approach a direct lender or a broker? Both have their merits and the answer really lies in your circumstances and the type of loan you need.

Direct lenders can give you an instant decision on your loan application and as everything is done in house, the processing and paperwork can be completed very quickly. They usually only have limited products however and as they are tied to these you may not get the best product to suit your needs. If you have reasonably good credit and are looking for a straightforward loan, then a direct lender may be totally suitable for your needs. As they are often large financial institutions such as banks or major finance companies they can offer competitive interest rates, and sometimes other services such as payment holidays.

If you have more complex needs then a broker may be a better choice. Loan brokers have access to many different loans and lenders and are more likely to be able to find a product suited to your needs. Be aware however that although they are not linked to any one lender or product, they are not completely impartial. Loan brokers receive a commission from the lender for any product they market, so they may try to push the product which offers them the largest pay check. If you have bad credit, are self employed, retired or require a loan for an unusual purpose then a loan broker is more likely to be able to match you with a specialist loan product than a direct lender.

There is a misconception that applying to a loan broker can be harmful to your credit record. This is because people mistakenly believe that all those credit searches will leave a footprint on your credit record. In actuality, there will probably only be one search recorded against your credit history, which will be the initial check done by the broker. Being turned down by a succession of direct lenders is much more damaging to your credit record than a search by a credit broker. Lenders take into account previous credit searches when deciding whether to lend. If you have bad credit or you think you will be turned down by a direct lender you may be able to protect your credit history by going through a broker.

For more information on loans and finance for adverse credit visit get money now. We can help you get the finance you need right now.

By Lisa M White
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