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The Difference between Guarantor Loans from a Direct Lender versus from a Broker

In this blog we take a look at the difference between guarantor loans from a direct lender and guarantor loans from a broker. This will hopefully enable you to make a more informed decision when considering making a loan application yourself.

When starting out on the hunt for a loan many people start using a search engine and immediately get confronted with a huge number of options. There are unsecured personal loans, guarantor loans, short-term loans, bad credit loans and many more besides, however the ones we are looking at today are guarantor loans from a direct lender and guarantor loans from a broker.

Guarantor Loans Using a Broker

A broker is a middle man who helps to find a range of loan options relevant to your needs. When applying for an unsecured personal loan or a guarantor loan, as they are often referred to, a broker will essentially shop around for you in an attempt to find a lender that fits your specific criteria.

Loan brokers will have a list of direct lenders that they will go to and, if possible, will facilitate the application or at least and introduction. The draw backs to this are that brokers often include a fee to cover their services. Not all brokers do this, some will instead receive a commission from the lender should the application be successful.

Brokers may sometimes increase the time it takes to makes changes to an application due to having to communicate the message to the direct lender they are in talks with. This can extend the length of time it takes for a loan to be approved and time taken for a successful pay out.

Brokers are required to be clear from the start that they are a broker and not a direct lender. They also have to be completely transparent about their fees and the terms of payment, as well as everything from the APR to the interest rates.

Brokers also have to be clear about any commission they might receive from your successful application and need to be authorised and regulated by the Financial Conduct Authority (FCA). You can check here to search the Financial Service Register.

Guarantor Loans from a Direct Lender

As the name suggests a direct lender deals with the loan applicant directly. You will need to find the company yourself and deal with them on a one to one basis. They will require the same information as a broker about your personal circumstances in order to consider a loan application.

They will conduct a full affordability and credit worthiness assessment to understand whether the requested loan would be affordable and right for your needs. A lenders main concern is that the loan is appropriate for you including in particular whether you will be able to afford the repayments without affecting your ability to meet your ongoing commitments throughout the term of the loan.

Making changes to your application is potentially easier with a direct lender as there is no middle man to go through, and there are (usually) no fees, although this does not apply to all so be sure to check specifically what fees are applicable.

Should You Choose a Direct Lender or a Broker?

The bottom line is that we cannot tell you which is right for your needs.

  • Brokers do a lot of the leg work for you but can take longer to complete successfully. They also sometimes apply a fee.
  • Direct Lenders may be easier to deal with in terms of communication but don’t offer the range of options a broker can.
  • Both have their benefits so it’s up to you to ensure you pick the right one for your needs.

George Banco is a direct lender so you know that if you make an application through us that you are dealing with the company lending you the money. We are registered and regulated by the FCA so you have assurances that you are dealing with a reputable lender. Interest is applied to all loans at the appropriate rate but we do not charge a fee for our products.

If you want to make an application for a George Banco Guarantor Loan (a direct lender) then please click here and complete the online application form.