Are loan brokers as good as they sound?
You’ve probably heard of loan brokers. It is a company that offers a service where they cooperate with a large number of banks and lenders and when you borrow you send in a loan application through them, which then goes out to all the lenders with whom they work.
You then get answers from anyone who wants to legend to you and their best offer when it comes to interest, etc. There are two main benefits of loan brokers compared to applying for a loan directly from a lender. First, you can apply to a large number of banks and lenders at the same time.
If you had wanted to apply to so many different manually, you would have had to submit 25 different applications and received as many credit information taken in your name. It had taken time and been quite cumbersome and you do not want it to be taken too much credit information as it lowers the credit rating. Now this is done automatically with only one credit report.
Second, you can use the service to compare the interest rates of all these lenders and choose the best offer. So, theoretically, you can get quotes from 25 different lenders and then pick and choose between them. Of course, the interest rate is usually most important so you can take the loan with the lowest interest rate, but there are also some other things that can play into your choice.
So it sounds pretty good with loan brokers. A single application to reach out to lots of lenders, get quotes that you can choose from and then make your choice for which loan is the cheapest and hopefully get a good loan. The question then is whether everything is superb with loan brokers or if there are any disadvantages or anything else to consider when borrowing through them. We will try to go through that.
Things worth thinking about
The biggest and most important thing to keep in mind when it comes to loan brokers, in my opinion, is that no loan broker cooperates with all banks and lenders. Since you only receive offers from lenders with which the intermediary cooperates, you may miss some lenders.
It is not uncommon for the largest ordinary banks not to cooperate with loan intermediaries and therefore you can miss them when applying. These banks often have good interest rates and among the cheaper loans and so it is a bit silly that they are not included. It should be said that some loan intermediaries cooperate with some major banks, which is nice.
In any case, you should keep in mind that some good lenders can be taken and not represented. For example, you can always consider supplementing an application with a loan broker with an application at your own bank, where you are a customer or at a major bank that you think has cheap loans.
Quantity and quality of partners
It is also a little different how many banks and lenders a particular intermediary works with. Some have around 30 banks under their roof but others may only have 15. The more the better it is often, but it is also important who the lenders are. It is better that there are 15 good banks with cheap loans in the list than 30 lenders with high interest rates.
You should therefore preferably check out how many and which lenders are actually working with a particular loan broker, so that you are satisfied with the offer. If you are not completely satisfied, look around at some of the major lenders and see which of them seems to have the most and best lenders in their stable.
Most loan intermediaries say that they accept payment remarks but it is never really the question that the intermediary either allows or does not allow such. It is the different lenders who have their own rules for this. Some do not allow payment remarks, while others may lend to you anyway.
If you have a payment note and apply for a loan, you will only receive quotations / be approved by the lenders who accept that there is an active note. Others will not approve your application and therefore will not send out a quote. Keep this in mind when applying so you know what to expect.
In addition, many lenders who actually approve payment remarks are likely to do so only for amounts up to a certain level. For example, it may be that you can apply for loans from USD 10,000 to 600,000 at the loan intermediary. However, it is conceivable that some lenders only allow payment notes for loans up to USD 50,000 or less.
This means that you may be trying to borrow more than what is approved and that it will result in fewer or worse offers through the intermediary. For example, it is conceivable that the interest rate will be higher than you intended or that you will only be offered a lower loan amount. By keeping track of what applies, you can prepare for what you can get and plan your loan based on this.