Looking Closely at the Benefits of Direct Lenders

As many of you will already be aware, there are two very different types of payday loan lenders who exist online. Both offer the ability to borrow a small sum of money, to be repaid over a good selection of pre-chosen terms but the real difference is how the customer gets to the point of being either accepted or declined for a loan. These two types of providers can be broken down in those known as direct lenders and then those known as loan brokers. There is no doubt that both provide a service which may be of use, depending on the individual needs of the applicant. However today we will be focusing on the positives of one of these providers in particular; direct lenders. For some time, direct lenders have been deemed the preferred choice in the vast majority of customer cases and this article serves to understand exactly why that is.

To look at the positives of direct lenders we must first understand the fundamental difference between them and the loan brokers. So firstly, direct lenders offer a service which is completely in-house which means the application form through to the point of a decision being delivered comes from one lender and this is the lender with whom the application is completed. Therefore, when applying a customer can expect to receive a decision from the same company with whom they supplied their information. In the case of brokers, the procedure is different in that they do not actually provide a borrowing resource directly. Instead brokers will use the information supplied by the customer during the application process to see if they can find a lender who will potentially consider accepting a loan. Therefore, a broker in some respects acts like a comparison service and can reduce the need to shop around different lenders. A broker however does not deliver the final decision as to the outcome of the application and instead this will ultimately come from the proposed lender which could result in an acceptance or a decline.

So what then are the benefits of using the direct lenders over the brokers when the brokers can help search through several different lenders seemingly at once? Well the answer is actually very simple. Firstly, in the vast majority of cases loan brokers charge a one-off fee for the service they provide. This fee is payable in all instances and this means whether their proposed lender is able to grant a loan or not, the fee is still payable. This can increase the total cost of borrowing for the customer compared to that of direct lenders. Another positive of direct lenders is you can be sure of exactly who you are dealing with at the point of applying for the loan, meaning there is no need to research a second option, which would be the case when a broker passes you to their proposed lender. These two factors alone are really worth considering before you decide whether direct lenders or loan brokers are the most suitable choice for you.