If you are looking for a payday loan, the sheer number of options available can feel overwhelming. Do you go through a payday loan broker or straight to a lender? And what actually is the difference between brokers and lenders?
In this article, we’ll take a closer look at how payday loan brokers work and separate the myths from the reality, so if you do decide to take out a payday loan, you will have a clear idea of what may work best for you.
Myth number 1: It costs more to take out a loan through a payday loan broker
Many people believe that they have to pay a fee, or an additional charge of some kind, on their loan, if they use a loan broker.
Good loan brokers should never charge you a fee. It is actually considered bad practice for loan brokers to charge for their services.
Most loan brokers such as Cashlady, earn their money by charging the loan providers commission.
Indeed, the relationships that loan brokers have with loan providers, can sometimes mean that they are able to get more attractive deals for those looking to take out a loan.
Always check the small print of any loan broker that you are considering using, to ensure that you will not end up paying a fee for them to find you a loan.
Myth number 2: Loan brokers lend money
Loan brokers do not lend any money. Their purpose is to find the best deal for you, as the borrower, as well as to introduce lenders to customers.
It is the loan provider that lends money to borrowers.
Essentially, a loan broker is a kind of introduction service to introduce customers to different lenders who may be able to lend them money.
Myth number 3: Going to a payday lender directly is much quicker
It’s a common misconception that applying for a loan directly with a payday lender will result in you getting your money much more quickly, than if you apply through a loan broker.
This is not always the case. If time is of the essence, a payday loan broker can check each lender’s lending criteria against your application and match you to the loan provider who is most suited to you. Your application is then sent to these lender/s.
This process could result in saving you time compared to making an application directly with a lender, as you may not waste time applying to lenders whose lending criteria could mean that you may not get a loan with them anyway.
Myth number 4: Loan brokers are exactly the same as comparison sites
Comparison sites and loan brokers are not the same thing.
A comparison site will show you a list of lenders and their potential offers. After selecting an offer, you are then normally taken to the lender’s website to apply directly with them. These websites can be an invaluable source for those wanting to do market research before applying for a loan.
Conversely, loan brokers are there to match customers to potentially suitable lenders.
Myth number 5: You can only find the best deals through loan brokers
Loan brokers are not the only option when it comes to finding the best loan for you.
You can spend time doing your own research on payday lenders.
When researching different lenders, it is important that you set aside enough time to make sure that you fully understand a provider’s lending criteria and know exactly what they are offering, so that you can find a lender that may provide you with a loan on terms that are suitable for you.
There are various myths surrounding payday loan brokers, many of which we’ve tackled for you today. As with any big financial decision, it’s important that you do your research and fully understand what you are signing up for, before committing yourself to any financial product. When considering taking out a loan, it is vital to ask yourself if you really need to borrow money.
Loan brokers can provide a valuable service to those looking for a payday loan. Just remember to make sure that you are using a reputable loan broker who won’t charge you any fees.
