Online loans are available directly from loan companies online, or you can find online loans through a broker. An online loan broker will have a panel of lenders, usually up to ten or more which they have carefully selected.
What is an online loan broker?
Online loan brokers are not lenders themselves. They are brokers, websites, where you can find loans, but will eventually deal directly with your loan company. Just like a loan company, a loan broker will be authorised and regulated by the Financial Conduct Authority (FCA) in the UK. The loan companies they work with will also be registered and authorised by the FCA.
The CashLady website here is one such loan broker which is reputable and regulated by the FCA. A good online loan broker will not charge you a fee for their services. Instead, they take a commission from your eventual loan company for the introduction of your loan.
It can be an effective to find online loans through a broker if you have a poor credit history as they submit your application to be considered with a number of loan companies.
Equally, if you have a good credit history but want to save time and compare online loan companies, online loan brokers are a good place to start.
If you would like to check if your preferred loan broker is authorised and regulated in the UK you can check the FCA register at https://www.moneyadviceservice.org.uk/en/articles/credit-brokers-and-payday-loans
You should not use an online loan broker if they are not registered with the FCA.
Why find online loans through a broker
Searching for online loans through a broker offers a fast and simple way to consider multiple loan companies. You complete one application which is submitted to online loan companies who will consider your specific situation. Your application will not be submitted to loan companies who are unlikely to accept you. Once you have a lender who is considering your loan you will deal with them directly.
One application form
When applying for online loans through a broker, you will fill in one application form which is submitted to many lenders. To compare many lenders yourself you will need to submit an individual application form to every lender. This is time-consuming and may result in multiple credit checks.
Using an online loan broker means you quickly have a number of loan offers, repayment terms and interest rates to consider.
One credit check
The advantage of a single application form, and credit check, for multiple lenders, is the effect on your credit rating. Every time you go through a credit check it can negatively affect your credit rating. So, using a loan broker will benefit you by protecting your credit rating somewhat, while you are comparing loans.
Applying for online loans through a broker. Reaching new lenders
The panel of lenders an online loan broker has is carefully selected. Though you should always conduct your own checks. A reputable loan broker will have conducted their own. It is likely they will use a mix of well-known, established loan companies, as well as new, competitive lenders. The access to less well-known lenders might produce some competitive offers to consider.
If you have chosen a reputable online loan broker, you know that they will have vetted their loan companies. Though you should also do this with your final, chosen, loan provider. Submitting one application form rather than lots of individual ones across the internet is also safer for your personal information.
How to choose an online loan broker
You can find an online loan broker in much the same way as you would find an online loan company. However, there are less online brokers than online loan firms. It will be easier to find and compare online loan brokers.
You should look for:
- A well-built website
- Good independent reviews
- Impartial advice
- That they are FCA registered
How will the application process for online loans through a loan broker be different?
The main difference with using an online loan broker is the single application form which is submitted to multiple lenders. Once you have compared any offers you receive, and have chosen your preferred online loan offer and loan company, you will deal with them directly.
What will the process be when I apply for an online loan?
- You will complete a loan application form on the credit brokers website
- If successful, you will complete the loan process directly with a quick loan lender
- Your lender will need proof of your employment and income
- They will conduct a credit check and affordability assessment
- The lender will then offer you a quick loan if you are approved
- You will need to agree on the terms of the loan
- Once agreed and finalised, the lender will send your funds directly to your account