Major Distinctions Between A Direct Lender And A Broker

business_consultingDirect lender is popularly also known as the reputed lender. He is the one, who generally provides loans to the brokers. The broker acts as a bridge between the reputed lender and the borrower. In situations when, you have ample time for availing loans, may be for big industrial projects or similar ventures, brokers can be beneficial, as they help in identifying the best sources of such loans.

Time factor

But, these brokers
may not be feasible and worthy in many other situations. A common man is generally in need of money instantly. Time becomes the most important factor in situations, he applies loan. Brokers are bound to take extra time to process the loan, because they are not the direct lenders. However, the reputed lenders can instantly process the loans, without much delay after quick scrutiny of the documents.

Working phenomenon

The brokers and reputed lenders work in a similar fashion. Like the reputed lenders, the brokers scrutinize major documents; measure the credibility of the borrower, assets & liability ratio, etc. The credit scores they provide and various other parameters of evaluation are more or less similar in both cases.

Interest rates

The major difference lies here. The intermediates are bound to charge more than the source. In some or the other way, may be through commissions, processing fee or through other modes, the brokers tend to charge higher charges for the loans they provide. The interest rate is significantly low, in case of a direct lender.

Scale of operation

The reputed lenders operate in a considerably larger area. They have accessibility or reach, may be through physical outlets or through online portals, to all parts of the nation. They have a rich connection and a national identity. Thus, considerably they operate on large scale, compared to the local lenders or brokers. The presence of these brokers can be felt only in two or three localities. Their scale of operation is very small and is limited to a particular geographic area.

Licensing and Monitoring

A direct lender is much more systematic and obligatory to law, compared to the brokers. The reputed lenders are less in number, as they are licensed and are strictly monitored by some or the other institution, usually headed by the government. The brokers may or may not possess any license. No law is implied to the brokers and the governing bodies cannot authorize control over them.

Use of technology

Brokers usually are not so organized to implement the modern technology into their business. They deal on small commissions and hence, try to minimize costs, by using conventional modes of approaching individuals for loans. They may sometimes also use various modern modes of advertisements like the digital campaigns, etc, but, are still inferior to the technological advancements used by the direct lender.

The reputed lender offers many services online nowadays. It maximizes the available technological resources and renders the same in the form of value added services to the customers. Since, the reputed lender has a larger base of customers compared to the brokers; the cost can be adjusted amongst the revenue it generates.

This has led to many services like online loans, with just a click of a mouse button.

Repayment schemes

It is important to realize the repayment scheme, especially for the short term loans. The repayment schemes may be quite liberal and customized, when they are availed from the reputed lenders. The payment tenure, installment, type of installment, frequency, etc, are mutually decided, in case of a direct lender.

However, these benefits may or may not be provided by the broker. They tend to offer rigid repayment solutions to the borrowers and not the customized ones.

 



Benefits of availing loans from the direct lenders

iStock_International_BusinessLoans are really essential in our lives. Many of us take loans to square off the daily expenses, while others procure them for maximizing their earnings. Being an essential component in our lives, either for managing expenses or for maximizing earnings, it becomes essential to invest some thought, before borrowing a loan.
A direct lender may be a reputed institution, which has a nation-wide recognition and their presence felt in all parts of the country. They are also popularly known as licensed lenders. Considering some important benefits of the licensed lenders, we can analyze the need for considering the licensed lenders, over the local lenders.

Loan amount

The loan amount can be an important consideration for an individual. An individual has to be spot on with assets and documents, to avail any form of loan from the licensed lenders. However, the local lenders may offer loans of different amounts, without any documentation or lien to any asset.

It is important to understand that, the local lenders may use unlawful acts to extract money but, the direct lenders will work according to the pre defined system of rules and regulations. People with sufficient assets can draw loans at lower costs from the licensed lenders. People with poor credit status have to consider the local lenders.

Feasible

The loans provided by the local lenders charge significantly high rate of interest. They are actually based on the rate of interest, being charged by the licensed lenders like banks and various other financial institutions. Weighing all parameters like processing charges, interests, etc, the loans availed from the direct lender are pretty much feasible, compared to the local lenders.

Tenure

Any loan is best advised for a short tenure. Not as short as a day or a week but, considering time say 3 months or 6 months, based on the utility is essential. The flexibility of setting of tenure is largely not provided by the local lenders. The direct lenders allow individuals set their loan tenure, based on their convenience and payment ability.

Trust worthiness

For the purpose of availing loan, we disclose a lot of information to the lenders. It may be in relation to the assets we hold or the monthly and yearly income we earn. It is important to consider reliable lenders, which withhold these important details and not disclose it to anyone. The privacy and safeguarding of documents & information is best ensured by the direct lender.

Reliability in process

Most of the licensed lenders are governed by some or the other Governmental body. This ensures their functioning is monitored and their credibility is ensured. This provides a feeling of reliability in the process and functioning of the licensed lenders. This type of faith and reliability cannot prevail, in case of the local lenders.

They are not monitored by any organization and perform activities, which please them, without any enforcement of law. The functioning of the local lenders cannot be objected or opposed, once we become the debtors of the local lenders. They pressurize and exploit the borrowers, to extract maximum benefits from them.



Factors of consideration for selecting the best direct lenders

Job-Or-BusinessThe direct lender may be the best source of availing loan. It is important to understand a few factors of consideration, in order to ensure the selected lender is apt for us. By considering them, an individual can identify the best source for self.

Reputation of the lender

Many authorized lenders may be new to the market or may have some black spots on their reputation. It is important to carefully analyze the lenders in such situations. Authorized lenders, who are free from any sort of allegations and have a descent reputation in the market, should be considered, over others.

Interest rates

There might be small variations between the interest rates charged amongst various authorized lenders. It is important to consider a direct lender, who charges low percentage of interest, if you are looking for big loan amounts. Small interest rate variations can hurt you significantly, in case of big loan amounts.

Processing fee

Many authorized lenders may deceive individuals by providing extremely low rate of interest loans. But, they make up a good percentage of money from indirect charges like processing fee, transaction fee, etc. It is important to extract information on these parameters, before finalizing the lender, based on low interest rates.

Documentation

The process of documentation is necessary. Many authorized lenders, especially for a huge sum of money, scrutinize a lot of documents. It is important to select an authorized lender, who scrutinizes documents quickly. Also, the authorized lender should scrutinize very few dedicated documents and not all documents. Thus, considering the documentation process is also an essential factor for selection.

Time

Many individuals require loans instantly. They are forced to consider the unauthorized or local lenders, because they cannot spend their time on tedious procedures, followed by the authorized lenders. But, it is important to note that, the individuals can now avail loan instantly, in up to 24 hours from various authorized lenders. The development in technology has helped individuals avail loans instantly, without any delay.

Other value added services

In this world of competition today, every authorized financial company wants to stay ahead in terms of market share and other similar attributes. In order to achieve the same, the companies provide various value added services. These value added services are a factor of consideration, as they add on to the benefits of the loan. Considering an authorized institution, which offers flexible duration, zero prepayment charge, excellent customer care, etc, is important.