Those who are new to lending and the financial industry in general might have already met with different brokers and lenders and wondered how they can help secure a loan. This article aims to differentiate the two and define the roles that they play in the general lending process. Knowing what brokers and lenders do can help potential loan applicants decide how they want to go about getting financial support. While the decision to go with a broker or a lender does not lessen one’s chances of getting approved for a loan, it still helps to know what roles they play in the process so that expectations can be managed accordingly.
The Lender’s Role and Responsibilities
In the financial world, a lender is a company or an individual that acts as the single primary lending source. Loan applicants can simply walk in and interact directly with a lender in order to secure a loan. Application can also be initiated over the phone or online through the lender’s website, and the applicant will be the one responsible for providing all the information required during the process. Direct interaction with a lender can significantly reduce the time it takes to get approval, the entire process completed in less than an hour. On the other hand, first-time applicants may find the process confusing, making it difficult to get approved for a loan. While declined applicants can always go to other lenders for approval, it helps to have a copy of one’s credit report to see why the application was declined.
The Broker’s Role and Responsibilities
A broker acts as a liaison between the lender and a loan applicant. Those who are new to lending may find the services of a broker to be invaluable as they make it easier to apply for and get approval for a loan. The broker can not only help applicants find the type of loan that best suits their needs, but also find the lender that offers the best financial product for them. The convenience of having a broker do most of the work can cost a certain amount, but it will all be worth it once the loan is approved. Brokers work with a number of lenders such as banks and short-term loan agencies so that they can provide applicants with a wide array of financial products to choose from. In the end though, brokers have little to no influence on whether a loan or credit card applicant will be approved or not as that decision is still made by the lender.
Working with Brokers and Lenders
Knowing the roles and responsibilities of brokers and lenders can make any loan application easier on an applicant. Securing the services of a broker can help save time and avoid confusion, while working directly with a lender provides applicants with the ability to make their own choices. It all comes down to familiarity with the loan application process. First time applicants can certainly use the help of a broker, while those who have more experience in the business usually know exactly what they want and can therefore work directly with a lender.
One upside to working with a broker is that even if the applicant is fairly familiar with the nuances of the lending and financial industry, reaching out to multiple lenders can still become a challenge. Coordinating with a broker makes it easier to engage multiple lenders and obtain information about the different financial products that they have to offer. But if the applicant is intent on working solely with one particular lender, then having a broker to act as a middleman may no longer prove necessary.