What is a direct lender?
A direct lender is the company that lends you the money. You apply to it, it makes the decision, and you repay it directly. It sets the interest rate and terms of the loan.
What is a loan broker?
A loan broker doesn't lend money. It introduces you to lenders, usually by searching a panel of them for products that may suit you. The lender still makes the decision and sets the terms.
Direct lender vs broker at a glance
| Direct lender | Loan broker | |
|---|---|---|
| Who lends the money? | The lender itself | A lender from the broker's panel |
| Who decides? | The lender | The lender (not the broker) |
| How many options? | That lender's products only | A range of lenders in one application |
| Applications | One application per lender | One application, searched across lenders |
| Who pays the broker? | Not applicable | Often the lender, by commission |
Which is right for you?
Neither is better for everyone.
- A direct lender can make sense if you already know and trust a particular lender.
- A broker can save time if you'd like to see options from several lenders without filling in many separate forms.
Whichever you choose, check the terms, the total amount repayable and whether you can afford the repayments.
How to check a firm is genuine
- Search the FCA Register. Look the firm up on the Financial Services Register and check its name and reference number match its website.
- Check the status. It should be authorised for consumer credit lending or credit broking.
- Beware upfront fees. Be cautious of any firm that asks you to pay a fee before you've been offered credit.
- Beware big promises. No lender or broker can guarantee approval in advance.
If you think you've been targeted by a scam, report it to Action Fraud.
How SmartLoans works
- Apply online. Tell us how much you'd like to borrow (£100 to £5,000*) and a few details about you.
- We search our lenders. We look through our panel of UK lenders. Lenders carry out affordability and credit checks, and approval is never guaranteed.
- You decide. If you accept an offer, your chosen lender pays the money out.
Direct lenders and brokers: your questions
Is SmartLoans a direct lender?
No. SmartLoans is a credit broker. We introduce you to lenders on our panel.
Do brokers charge a fee?
It varies by firm. SmartLoans doesn't charge customers a fee for our broker service. We receive a commission from lenders if you take out a loan following an introduction through our site.
Is it safe to use a loan broker?
It can be, if the broker is authorised by the FCA. Check the Financial Services Register before you share your details.
Can I get a loan from a direct lender with bad credit?
Some lenders consider a range of credit histories, but each makes its own decision and approval is never guaranteed. A broker can search several lenders at once.
Will applying affect my credit score?
Lenders may carry out credit checks as part of your application, and these can be recorded on your credit file. Check the details of any application before you submit it.
Late repayment can cause you serious money problems. For help, go to moneyhelper.org.uk.
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