16 March 2020
When applying for a short term loan, you may have run into a few phrases, like “Broker” or “Direct Lender”, and not quite understood what the difference is between the two, or even what they are exactly. The two phrases refer to different places you can go to in order to receive a loan; at Buffa for example, we are direct loan lenders, not brokers, and there are substantial differences between direct lenders vs brokers, which we will explore in full in the following article.
What is a Direct Lender?
A direct lender, is a type of loan provider that deals directly with the loan applicant; what this means is that the company that you apply to for the loan, will be the same company that deposits the funds to you, and who you will enter into a legal credit agreement with. The clue is in the name; a direct lender will lend money directly to you, without any other parties being involved in the process. At Buffa, for example, we are direct loan lenders, not brokers.
What is a Broker?
A broker, on the other hand, is a business that arranges transactions between a buyer and a seller; in the industry of loans, the loan broker will be the person you apply via in order to get your chosen loan, meaning you do not actually apply directly to the lenders themselves.
Because of this, the process of applying for a loan when a broker is involved can be longer and more drawn-out than when you apply for a short term, personal loan with a direct lender like Buffa. A broker will typically work with a broad range of direct lenders and will, based-upon the nature and details of your personal loan application, introduce you to a direct lender who may then be able to offer you the loan you require.
Ultimately, your application via a broker will introduce you to a direct lender with whom you will ultimately enter into a legal credit agreement and who will provide your required loan amount directly to you.
Direct Lender vs Broker
When it comes to comparing the two, applying for a direct lender loan as opposed to working with a broker brings with it lots of benefits, as a method to borrowing money.
Advantages of Direct Lenders:
- One of the main advantages of working with a direct lender like Buffa, is that all of your personal details are kept in-house and not passed from one company to another.
- Another potential danger of using a broker as opposed to a direct lender, is that in some rare cases, a broker may also charge a separate “referral” fee – something you do not encounter as a risk when dealing with a direct lender.
- Often, after being referred to a direct lender from the website of a broker, a customer will have agreed to the specific terms and conditions of the broker themselves. This often can include expressed permission to have your details passed to other 3rd party companies offering their own products and services to you. This in turn can lead to an overload of offers from different providers seeking to provide you with credit services and an unnecessary confusion at the time when you are trying to source your most suitable personal loan.
- Finally, when dealing with a direct lender you have the benefit of certainty about your loan. Because our direct loans are fully flexible and designed to suit your individual circumstances, not only can you can repay at any time in your own way, but you can also be sure who your loan provider is and who you need to contact at any point should you have any questions. At Buffa, we have a UK based team of customer assistants who available 7-days per week are to deal with any questions or concerns you may have.
Hopefully this blog article will have gone some way to explaining what loan brokers and direct lenders are, what the differences between a broker and a lender are and how they stack up when compared to each other. At Buffa, we are a short term loans direct lender and are here to help you. For additional financial help, tips and information, you can go back to the Buffa blog for more articles like this, or visit our Debt Advice Hub for specific articles on a vast range of topics, such as Budgeting, Debt Advice and more.