Using a loan broker can help ensure you’re getting the best deal when borrowing money.
Banks and finance companies are the most common places people go when borrowing money. You can get money from a lot of different institutions, and they often charge different rates, on different terms.
It’s hard to tell if you’re getting a good deal since there are so many lenders and different loan features. It’s also time-consuming to apply for different loans with different lenders. It’s important to know that applying for loans with different lenders means more credit checks are done by those lenders, all of which are kept on your credit history.
Having lots of recent credit checks and declined applications can hurt your credit score.
That's where a loan broker comes in.
You can borrow money from a loan broker, but they don’t lend you the money directly. They have connections with different lenders and can offer you a variety of options.
With just one application, you can get multiple loan options, giving you a higher chance of getting a loan. Also, your credit score is only checked once, so your credit score won’t be adversely affected.
Some loan brokers are better than others.
Check out these tips to make sure your loan broker is acting in your best interest.
Brokers earn money by getting loans from lenders on your behalf. The lenders pay the broker’s commission.
Brokers can also serve as financial advisors - this is a huge advantage.
In other words, they can offer you more than just loan options. They can discuss the pros and cons of each. They must point out which is best for you.
They’re accountable for the recommendations they make and must prove they put their clients’ well-being above everything else.
Suppose you had three loans to choose from, and one of them generated a lot of commission for the broker, but wasn’t in your best interest – a broker who is a financial advisor has to tell you this, even if they lose out on commission.
A loan broker isn’t always a financial advisor. That means they don’t have to point out which loan option is in your best financial interest. Be sure to check if your loan broker holds a Financial Advice Provider License issued by the Financial Markets Authority.
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