If you have always wondered what the difference between a broker and lender is then you have landed in the right place. Knowing the difference will allow you to decide which option to choose the next time you are applying for a loan. Although the decision you make will not negatively impact your ability to receive a loan, understanding their roles in the application process will help you understand the process you have chosen to undertake.
The Broker’s Role and Responsibility
Brokers offer their services to help you find a loan that best suits your needs. They are the liaison or the go between the customer (the person looking for a loan) and a lender (bank or short-term loan company). They can work with a variety of lending sources which can be beneficial for shopping for the best rates available. With a broker, you will fill out a normal application, over the phone or online and then the broker will pass your information to the lenders they work with in order to find you a loan that meets your needs. They may do this by filtering out the lenders that don’t meet the criteria or by simply passing your application in a secure way to them so that they can decide if you are eligible to apply for a loan or credit card.
The Lender’s Role and Responsibility
The lender is the company that gives you the loan. They are usually a single lending source; you would apply for a loan directly from them, without a broker. This is accomplished by contacting the company and applying for the loan in person, over the phone or online, you will be the party responsible for providing the information necessary to complete the application. If you are accepted by that lender then you may be able to receive your loan in as little as an hour. If you are declined then they may be able to pass your information to other lenders who may be able to help you. If you are declined for a loan, however, it would be a good idea to get a copy of your credit report so that you can see why you may have been declined. You should also think carefully before applying for another loan.
Brokers and Lenders Making Your Choice
Now that you know the difference between brokers and lenders you will be able to make an intelligent decision based on your needs. The use of a broker can save you time and confusion simply because they understand all of the nuances of their industry while going directly to the lender offers direct contact with the lender and gives you more power to make your own choice. It comes down to how much control you want to have during the process and how comfortable you are in handling its completion.
Brokers are available to help you find the right loan for you. They usually will have a pool of lenders to choose from and will decide based on their expertise the best choice for you. Going directly through a lender will give you more power over the process, if you are planning to reach out to multiple lenders this can be time-consuming, however, depending on your outlook it can be considered worth the effort since you will be the person who is responsible for repayment.