Finding the Right Credit Broker for You

A credit broker makes it possible to find a suitable loan of a value and for the purpose that you need it for. They don’t lend money directly. They represent a number of different lenders and indirectly help them find people to lend money to. 

In this article, we cover how to go about finding a credit broker that’s right for your needs.  

photo 401(K) 2012 via Flickr

What Is the Purpose of the Loan?

A credit broker won’t necessarily offer loans for every purpose. 

For instance, there are brokers that focus on personal loans to buy a car or ones to buy a van. Some brokers look for business loans whereas others strictly deal with individual consumers or homeowners when making recommendations. Also, usually brokers are country specific. Therefore, one broker might source certain types of loans just for the U.S. market but not the UK or Europe. 

Therefore, it’s important to establish when you are contacted by a credit broker and get in touch with one, what services do they offer, to whom, and what places do they cover?

Do They Offer the Lending I Need?

Once you’ve narrowed down the company to a country and what they offer, question whether they can source a suitable lending provider for the loan required?

For example, Auto Finance Online is a regulated credit broker in the UK. They offer to find a loan for caravan purchases. They also source lenders for loans to purchase a motorhome. 

Are Credit Brokers Regulated Properly?

Regulators for credit brokers ensure that they provide a high-quality, authorised service. This governs their conduct and avoids dealing with companies that shouldn’t be in the industry.

In the U.S., there are various authorities that regulate financial services including the Consumer Financial Protection Bureau who is a government agency covering financial companies. In the UK, the Financial Conduct Authority is the regulatory body that covers credit brokers. But there’s also independent feedback on TrustPilot.com, which provides consumers with genuine customer reviews. These are helpful to find recent comments about the broker to ensure their service is reputable.

Finding the Right Credit Broker

Beyond locating a credit broker that can source applicable loans, also consider the best rate offered on the loans they find for you. Hopefully, they can locate loans with competitive rates by matching different lenders and comparing the loan offers. The total cost of the loan, the interest rate, and any other loan fees are all relevant considerations to better understand what a recommended loan will cost. 

Also, look at any early repayment clauses to see how expensive it will be to repay earlier than the full term of the loan. If your income increases and you’re able to repay the loan sooner, you’ll be happy that you checked out this feature of the loan recommended by the broker before taking it out.

Using a credit broker is a good idea to find loans that apply to your circumstances and for the loan’s intended purpose. It can make tracking down a suitable lender much easier especially when the lender is more specialised. 

Author: Carol Trehearn