With the cost of living getting ever more expensive, many people are turning to payday loans and short term loans for fast financial help. Typically, loans are used to manage through to payday – perhaps to make up the rent or buy groceries, or to spread the cost of an large one off expense – such as the winter heating bill or an appliance replacement.
If you find yourself in need of help with your cash flow troubles there are a few options open to you. The first decision is a simple one – high street or online? It’s a personal choice between how comfortable you are airing your financial affairs in a public place and how confident you are transacting on the web.
Not surprisingly, many people choose to apply for loans online – it’s fast and convenient, and you can deal with your money problems in the privacy of your own home.
However, once you’ve made the decision to apply online, there’s a further dilemma – do you go direct to a lender such as Wonga?; use a comparison website such as money.co.uk?; or the services of a loan broker like Instant Lolly? At the end of the day, it’s down to personal preference, but there are undoubtedly pro’s and con’s to all of them.
What does a short term loan broker do?
A loan broker will act as a middleman between you and direct lenders. Typically, a broker will have a relationship with upwards of 20 specialised payday lenders and short term lenders. You enter your details just as you would if you were applying directly to an online lender and your application is processed while-you-wait. Just like applying direct, if you’re approved, you can get cash in your bank within a matter of minutes.
UK loan brokers are regulated by the Financial Conduct Authority – so you will have the reassurance that you’re working with a compliant company who will deal with your application and personal details in a professional manner.
How can a loan broker help you?
Using the right broker can vastly improve your chances of being approved, by finding the right lender for your circumstances. It’s not just a case of taking your details and applying to every lender the broker has a relationship with – they use clever matching software to pre-select lenders that might offer a loan and discard those that definitely won’t. This goes far beyond matching just the loan amount and duration.
Most lenders have their own unique criteria which a borrower must fulfill before they can even be considered for a loan – this can extend to age, job status, how and when you’re paid, and more – and takes place before your credit history is looked into. Typically, a direct lender will extend loans to less than 10% of applicants.
A broker will cut through this and determine who is a perfect match for you in a matter of seconds – then submit your details electronically to suitable lenders. To do this yourself would require you to find potential lenders, cross reference product info and eligibility criteria, and then complete each lenders application form individually – it could involve of hours of researching and repeated form-filling.
What to watch out for when selecting a broker
There are two main issues to watch out for when choosing a loan broker:
Fee charging brokers
There are still a small number of loan companies out there that charge fees, and despite what they might imply, there can never be a guaranteed loan at the end of the process. The good news is that there are a far greater number of brokers who don’t charge fees – so if you find one that does, move on.
Badly behaving brokers
Prior to the FCA arriving on the scene, many people who should have been prevented from operating as lenders, brokers or intermediaries were allowed to. This resulted in many deceitful practices being carried out by unqualified people with no interest in their customers’ welfare. Many of these parties have since been shut down or left the market, but there are still a few lingering amongst the search results.
However, there are a few common-sense checks you can make to ensure you stay safe:
Does the website look professional? Is it well written in good English?;
Is the right tone being used on the site? Sites that offer guaranteed loans or no credit check loans aren’t being truthful, and won’t have your best interest at heart;
Does it display a Consumer Credit Licence number, Data Protection number and a physical address in the footer? If it does, check the CCL on the Consumer Credit Register – if not, reach for the back button.
If you’ve got slightly squiffy credit history, or your circumstances aren’t the norm, a short term loan broker could make your loan search much faster, and with less hassle to boot.