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Personal loan brokers

Take the hassle and stress out of finding a personal loan by using a specialised loan broker.

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By

Tom Stelzer

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What is a personal loan broker?

A loan broker is a third party that seeks out and negotiates a personal loan on your behalf. It can act as a go-between for both the borrower and lender.

Finding a personal loan yourself can take a lot of time, effort and stress. By using a personal loan broker, you needn’t waste time searching around for a loan by yourself. A broker can help you find the option that is best suited to your financial situation and requirements. You’ll also have the benefit of a single contact for the full term of your loan.

Personal loan brokers can help you with the full range of personal loan products offered by lenders. Whether you’re planning a holiday or buying a new car, a personal loan broker can assist you with finding a suitable product. Brokers can be especially helpful for those with complicated situations or poor credit scores, who are typically rejected by traditional lenders.

How do personal loan brokers work?

Personal loan brokers work in a similar way to mortgage brokers: they help you find the best deal on your loan. They search for a loan within their panel of lenders and try to find the loan that is best suited to your needs.

Once you sign up for their services they will find a product from one of these lenders. Most personal loan brokers offer online applications and loan management, so there is no need to book an appointment or sign and post documents, which can save you time.

Why should I use a broker?

Personal loan brokers offer you convenience. They can find you the best loan option for your unique circumstances. They may be particularly useful if you have a bad credit score or trouble meeting the standard lending requirements at larger financial institutions.

Using a broker can help you maintain a good credit score by preventing unnecessary applications and potential rejections from multiple lenders. Brokers have a better understanding of different lending requirements of various lenders, so they won’t recommend products that you are likely to be rejected for.

A good example of a well-known credit broker is Monevo, which connects borrowers with loan providers to compare loans of up to £25,000.

Monevo works with multiple lenders so you can see quotes without doing hours of research – with no impact to your credit score. Its “soft search” facility means you can search through its panel of lenders without it affecting your credit score. However, you’ll sacrifice some variety because you’ll be limited to Monevo’s network of partners. The advantage is that Monevo’s free service lets you compare personalised and pre-qualified rates from its lending panel, while also cutting down the time it takes to look for a loan, especially if your credit is less than perfect.

Can I get a quick personal loan with a loan broker?

Yes, it’s possible to get a personal loan with quick turnaround by using a loan broker, especially if it’s an online broker like Monevo. Online brokers aim to make the loan process as straightforward and simple as possible. They remove many of the hurdles associated with applying for a loan through a traditional lender.

You can apply for a personal loan with an online broker within minutes, then see which lenders will approve your loan application almost instantly.

Can I use a loan broker if I have bad credit?

Yes, you can still use a broker even if you have poor credit. In fact, using a personal loan broker can be a great way to determine your eligibility for a loan without further affecting your credit score. Many online loan brokers will compare a wide range of loans and lenders, and may be able to find you a suitable loan regardless of how bad your credit score is.

How do I find a good broker?

  • Loans offered. Make sure the broker you are considering offers the type of loan that you require.
  • Type of interest. Most brokers offer fixed interest loans only.
  • Loan conditions. Can you pay the loan off sooner or make additional repayments? Make sure you can access these services without having to pay a fee.
  • Panel of lenders. This is the group of lenders from which your broker will choose a loan. The bigger the panel, the greater the chance of you getting the best deal available.
  • How they work. Some brokers operate almost entirely online, whereas others use the more traditional phone, post and meeting route. Make sure you’re comfortable with whichever system your broker uses.
  • Receiving funds. Brokers have different speeds at which they are able to approve and fund your loan. If you are in a hurry, an online-based broker should be able to approve your loan faster than a paper-based one.
  • Customer service. You will be dealing with the broker for the term of your loan, so make sure you are happy with the level of service it provides. Call it to see how long it takes to get an answer and find out what kind of support it offers.

What to avoid with personal loan brokers

  • A small panel of lenders. The more lenders your broker has access to, the better your chance of getting the best loan available. Make sure your broker compares a large range of options, otherwise you might as well just do it yourself.
  • Commissions. There isn’t anything wrong with a broker being paid a commission, just be sure of what the commissions are and how they affect the broker’s recommendations. Less honest brokers might push lenders that pay them higher, rather than the ones that offer the best option for you.
  • Fees and charges. Understand the fees and charges that you will have to pay. Ensure that they are all clearly explained to you before you commit to your broker and the loan. It may be worth doing a quick comparison with your current bank, just to get an idea of what you could get without assistance.

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