Thursday, November 4, 2010

Loan Brokers : What Is A Loan Broker?

In the same way an insurance broker will attempt to find the most suitable policy from its selected panel of insurers, a loan broker is similar in that they act as financial intermediaries between the borrower and the lender. Some loan brokers are truly independent which means they can access many different types of loans from a wide variety of lenders. As with most types of financial intermediaries, successful loan transactions initiated by the broker between the borrower and the chosen lender usually means the broker will earn a fee or commission payable by the lender. The commission or fee may be paid to the broker for providing the lead or a successful application. This is applies to any loan protection insurance that maybe taken out with the loan.

The United Kingdom's growing debt problem combined with fierce competition from the banks, building societies, supermarkets and major high street brands such as Virgin means the number of secured loan offers available has never been greater. For those who are either looking for professional advice or are confused, independent loan brokers can offer a valuable service because of their knowledge of the market place. They will be aware of current secured loan offers through their panel of lenders and can offer expert guidance through the application process. Remember, all loan brokers are licensed and regulated by the Office of Fair Trading (OFT) under the Consumer Credit Act. In addition, brokers will usually build up a complete picture from the borrower regarding their needs and affordability.

As with most types of financial services intermediaries, there are some brokers who choose to specialise in offering certain types of loans, these could be for bad credit or secured for the self employed, or buy to let as well as straightforward secured loans. These niche brokers are especially helpful to borrowers who are self employed or have county court judgements (CCJ's) or are deemed high risk because of their market knowledge and the services they provide.

In recent years, many loan brokers are able to offer their services online. The applicant simply fills out the online application form which includes the amount they are looking to borrow. It is worth noting that some online loan application forms are simply fact finding and others are full loan applications involving credit checks. As with any type of borrowing, the application process should be explained before this is entered into. Usually the lender contacts the applicant by telephone or email once the online application has been received to discuss the next stage. Each lenders loan application process will vary accordingly.


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