When you find yourself in a difficult financial situation, you might consider a payday loan to tide you over until your next pay check. Emergency expenses happen to everyone at one time or another, whether it is that your car has broken down, a pipe bursts in your home or any other unexpected yet costly situation, finding the cash to cover the costs can be difficult.
Payday loans are short-term loans that are designed to bridge the gap until payday, and they can help when you are in need of some cash quickly. Before you apply for a short-term loan, it is important to understand all your options in order to make the best decision for your situation. You can get a payday loan by going directly to a lender instead of by using a broker, and there are some differences you should be aware of when choosing which option is right for you.
What is the difference between a payday loan broker and a payday loan lender?
In simple terms, a broker is a company or individual who has relationships with many payday loan lenders. In most cases, they will have several loan providers that they can put their clients in contact with and compare them all to find the best deal.
When you use a payday loan broker, they will often take all your details in one single application, and then send these on to their collection of lenders. These lenders can then choose if they want to offer a loan to you, and you can then apply directly with them. A broker will never lend you money themselves. Instead, they put you in touch with other lenders that can.
A direct payday loan lender is the company that will actually loan you the money. You can choose your own payday loan lender without the help of a broker and apply for the loan directly with them. Most payday loan lenders will give an immediate decision when you apply and can even release the funds to your bank in a matter of minutes.
When you apply directly to a payday loan lender they will keep your information confidential, and it won’t be shared with anyone else, they also do not charge any upfront fees for making an application. If you apply directly with a lender, there is only one chance of getting approved for the loan, as you will only be applying to that one company.
You could choose to apply to multiple companies if you get declined the first time, but you should remember every time you apply you will get a mark on your credit file.
You should always bear in mind that when using a broker to apply for payday loans, various lenders may run credit checks on you, which will leave multiple marks on your credit file and could negatively impact your credit score.
Is a payday loan broker more expensive?
Every payday loan broker will be slightly different, and some may charge fees for using their services, while others might charge nothing. The majority of payday loan brokers will have good relationships with various payday loan providers and will pay them a commission for using their services. This means they are often in a good position to negotiate competitive deals, that you might not be able to access if you apply directly.
In most cases, using a broker is only more expensive than applying directly if they are charging you an upfront fee in order to use their services.
If you decide to use a broker, it is vital that you properly read all the terms and conditions to check if there are any additional fees involved. The majority of brokers will not charge upfront fees, but there are still some that will do.
Why use a payday loan broker?
Using a payday loan broker as opposed to applying directly with the lender can save you a large amount of time in researching the best deal for you. They do all the legwork on your behalf and will provide you with the best lenders for your needs.
A broker will consider all aspects of the loan for you, including the interest rates, how quickly they can release funds, and the terms and conditions of the loan. Many brokers can also save you time as you will only need to complete one application form to apply to many lenders at the same time, if you choose to apply directly you may have to complete multiple applications yourself.
It is important to remember that the broker is not the one actually lending you the money, and ultimately the decision to lend to you or not is down to the payday loan lender, not the broker.