Although all loan brokers do more or less the same thing, they can have very different ways of going about it. Sometimes, you may think you are talking to a lender when in reality it is a loan broker.
How can you tell the difference? And what is that difference, anyway?
How a Loan Broker can HelpA legit loan broker works like this:
A borrower comers to them looking for a certain amount of money. The broker, who is well versed with the paperwork and steps needed, guides the borrower through the process. Often times the broker will collect the information and submit the paperwork on the client’s behalf.
The advantage of using a broker is that they can find you the best possible loan, due to their experience in the field.
The disadvantage of a loan broker is that they have to get paid, as well. By adding another link in the chain, so to speak, you are adding onto your own loan costs.
The Dark Side of the Broker BusinessA legit loan broker can be a big help to someone new to the lending world, but there is another kind of broker who works very differently.
Online there are thousands of different website advertising loans. Much like the site you are on now, these places allow you to apply for a loan right on the spot with fast approval.
Very much unlike this site, many of the others are not actually lenders, they are loan brokers. They set up sites that look like loan companies, so that they can collect your loan application data. Once they have it, they sell your information to real loan companies.
You may think you are applying for a loan. In reality you are giving all of your personal and financial information to a third party who will sell it to the highest bidder!
There is nothing wrong with using a broker. There is something very wrong with a broker posing as a lender to trick customers.
Be cautious! Carefully check out the companies you borrow from, because it may not be a real company at all.