What Is a Personal Loan Broker?
A loan broker acts as a go-between you and a lender. A loan broker service can save you time and money. The same way a travel agent will negotiate a deal on your behalf.
Personal loan brokers can assist you in finding a personal loan that is tailored to your needs and financial circumstances.
You apply for a loan through a broker rather than directly with a lender.
The broker will then contact the lenders with whom they are linked as well as explore the market for a loan that is a good fit for you.
The Benefits of Using Loan Brokers
Personal loan brokers make things easier for you. Rather than comparing the market on your own, a personal loan broker can handle some of the work for you. You’ll also have a single point of contact for the duration of your loan.
They personalize their options. A broker can assist you in locating the best loan option for your specific situation.
Can assist candidates with poor credit. Brokers might be especially helpful if you have a low credit score or are having difficulty satisfying the typical loan standards at larger financial institutions.
Can assist you in maintaining your score. By avoiding unnecessary applications and potential rejections from various lenders, using a broker can help you maintain a strong credit score.
How Do Personal Loan Brokers Work?
Personal loan brokers work in a similar way to mortgage brokers: they help you find a good deal on your loan.
A loan broker can assist you with a variety of personal loan solutions available from lenders and help you find a suitable offer – whether you are planning a vacation or purchasing a new car.
Personal loan brokers look for loans within their lending panel, which is basically a group of lenders with whom they work.
They will find a product from one of these lenders once you sign up for their services. Most personal loan brokers provide online applications and loan administration, eliminating the need for you to schedule an appointment or sign and mail documents, which can save you time.
Be sure to ask your personal loan broker about:
- The total cost of the loan
- Any extra costs
- Number of lenders compared for your application
- If your information is exposed to third parties
- Fee disclosure
If you merely need a small loan amount to avoid using a credit card, a broker is not needed. Certain credit unions and smaller banks offer unsecured loans as little as $2,000, although brokers normally won’t work with loans as low as $5,000.
How to Find a Good Loan Broker
Look at the loans offered
Make sure that the broker you want to work with offers the type of loan you are looking for.
Consider the type of interest
Most brokers offer fixed-rate interest loans only.
The loan conditions
Can you pay off the loan sooner, make extra payments, or redraw on overpayments? Check to see if you may use these services without paying a price.
Look at the lending panel
This is the lender pool from which your broker will select a loan. The larger the panel, the more likely it is that you will obtain the greatest bargain possible.
How do they work?
Some brokers operate almost completely online, while others rely on more traditional methods such as phone, fax, and mail. Make sure you’re comfortable with the system your broker employs.
The funding time
Brokers have varying speeds at which they can approve and fund your loan. If you need a loan quickly, an online broker should be able to approve it faster than a traditional broker.
Loan Broker FAQs
Does it cost more to use a personal loans broker?
You may have to pay a monthly charge to use a personal loan broker, but you can try to negotiate a lower fee when you sign up for their service. All brokers earn money through commissions paid by the lenders they refer. This is not added to the cost of your loan or the interest rate.
Can I take out a loan from my current bank via a broker?
Brokers sell goods from lenders on their lending panel, that is, lenders with whom they have a relationship. If your current bank is on the broker’s loan panel and offers a competitive program, you can end up borrowing from them. Your broker, on the other hand, should be looking for the best value option for you.
Can I stop using my broker once I have a loan?
This will be determined by the terms of your contract. Before you sign on the dotted line, make sure you’ve read all the terms. If you want to change brokers, you will usually have to terminate the loan and get a new one.