What is a Direct Lender? Well a direct lender is a financial services company who is set up to lend money to either consumers or businesses; this part qualifies them as lenders. If they are lending rather than broking they qualify as a direct lender.
Why does this matter? Well in a number of market sectors, differentiating between indirect and direct lenders is very important. In our industry and market sector it is extremely important to know if the person you are applying to is a direct lender or indeed a broker. A broker is an individual or company who takes leads from people who are interested in borrowing money and they sell the lead to a lender. Some may question if there is a need for brokers at all. Most credit brokers in our industry, while required to be regulated as a full credit broker, do not have the same level of involvement in the lending process as say a insurance or mortgage broker. Many will simply match the borrower to a direct lender and then the rest of the dealings is with the actual lender.
So is there an advantage in going through a direct lender? This is an interesting question. Like many such issues there are advantages and disadvantages of both. In fact, our company acts as both a direct lender and a credit broker. When you apply on lendplus.co.uk we will firstly assess your application as a direct lender. If you meet our underwriting criteria we are likely to offer you a loan ourselves. On the other hand, if we are unable to lend, and provided you have given us your consent, we will then act as a credit broker and try to find you a loan with another lender. On the other hand, we also have websites where we do not aim to lend at all, but instead act as just a broker. Of course, on these sites, as required by law, we make it clear that we are not acting as a direct lender.
So which is best?
There is no real answer to this. If you want to do your own research into the lenders available, what they offer and find the best possible loan, and are then happy to fill out a handful of applications until you find one that will lend, then you may be better looking for a direct lender. On the other hand, if you want to fill in just one application form and allow the broker to submit this to many lenders on your behalf until one accepts it, then a broker may be your best option.
Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk
Representative Example: Representative 1286.98% APR on a loan of £300.00 with 5 monthly repayments of £101.03 Total amount repayable £505.13 Annual interest rate (fixed) 290% Maximum APR 1351%
This article contains information about products/services offered by us as well as those that we do not offer.
Author: Internal Marketing Department