loan broker uk

5 questions to ask a loan broker before you go ahead with them

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Type in “loan broker” to any search engine and, within seconds, you’re deluged with hundreds of different choices. How do you know the broker that’s best for you?

A responsible broker will only ever arrange loans for you that you can afford to pay back. They’ll put you and your interests at the very centre of what they do. But how do you tell who’s responsible and who puts you first?

The Loan Broker team are pleased to share with you the five questions you need to ask before you go ahead with any loan broker – and we give you our five answers too!

The five questions you need to ask before you go ahead with a loan broker

Are they licenced by the Financial Conduct Authority?

All money lenders and brokers must be licenced by the Financial Conduct Authority, Britain’s financial services watchdog. Any lender or broker who is not licenced will be operating against the law – worse still, they may be a loan shark.

Loan sharks regularly intimidate and harass their borrowers upping the level of interest they pay all the time without any form of notice. Whatever you do, please do not borrow money from someone who is not licenced by the Financial Conduct Authority.

On payday and short-term loans, borrowing from a Financial Conduct Authority-licenced lender using a Financial Conduct Authority-licenced broker gives you certain protections, the main ones of which are:

  • you’ll never pay more than 80p per day interest on every £100 you’ve borrowed
  • if you fall behind on repayments, you’ll never pay more than a £15 “late fee” (in fact, many Financial Conduct Authority-licenced lenders waive this fee altogether now – please check the terms and conditions of your loan documents)
  • added together, the sum of the interest you pay and any late fees will never come to more than the amount of money you borrowed in the first place
  • if you fall behind on your loan, your lender may point you in the direction of a debt charity advisor. That advisor, who normally works for free, will be able to represent you in any negotiations you have with your lender on paying the loan back.

Are they impartial?

Most brokers make their money when they successfully introduce someone to a lender who then takes a loan out. It’s known as a “thank you” payment or commission.

Different lenders pay different rates of commission though. Ask a broker to assure you that the recommendation they make to you will be based on what the best loan for you personally is and not the level of commission they make.

Do they charge you fees?

Some brokers actually charge borrowers fees as well as getting commission from lenders. The vast majority of brokers do not charge fees but please be careful to make sure that you won’t have to pay a broker any amount of money regardless of whether they find a loan or not for you.

Are they clear about the terms and conditions of your loan?

Each lender a broker puts you in touch with has their own terms and conditions. It’s absolutely vital to read those terms and conditions prior to taking out a loan because you’re agreeing to be legally bound by them. Ask your broker if you can spend time reading the terms and conditions before you make your mind up.

How many credit checks do they run on you?

The more credit checks that are registered on your credit file, the harder it is to be approved for a loan. If your broker is promising to introduce you to dozens of different lenders, ask them how many times a credit search will be run on your file through the whole process.

What are LoanBroker’s answers to the five questions?

As our name suggests, LoanBroker matches borrowers and lenders. We don’t actually lend you our own money. What we do is to take your details, use those details to understand who you are and what you can afford, and then, using our knowledge of what our vast panel of lenders want, connect you to the lenders most likely to want to work with you. We work with everyone – good credit, bad credit, little or no credit history.

Are we licenced by the Financial Conduct Authority?

Yes. That means that you benefit from all the protections we mentioned above.

Are we impartial?

Yes. Although we enjoy great and ongoing relationships with our panel of lenders, we never lose sight of the fact that we’re here to represent your interests. We’ll only show you what we believe is the best loan for you and that decision comes down to the cost of the loan and the lowest level of monthly repayments.

Do we charge you fees?

We never charge a borrower any fees whatsoever at any time. We don’t charge for searching for the right loan for you. You’re under no obligation to take out any loan we offer you, even if we think it’s a great loan for you. You never pay us to accept a loan and you don’t have to pay us if you say “no” to a loan we found for you.

We get paid a “thank you” commission by a lender every time a borrower agrees to take out a loan. That’s how we make our money.

Are we clear about the terms and conditions of your loan?

Yes. When you’re presented with your offer, you’ll see the terms and conditions of the loan we’ve arranged for you. Please take time to read it carefully. If there’s anything you’re unsure about or want help with, contact the LoanBroker team before agreeing to proceed.

How many credit checks do we run on you?

 Just the one. Because the panel of lenders we work with trust us, they’re happy for us to do the full credit search on you and then send them your search. If we find 10 lenders who want to work with you, we’ll send the same one credit report to all ten lenders. No matter how many matches we find, there’ll only ever be one credit search.

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