A perennial debate in the industry of payday loans is whether direct payday loan lenders are the best or if dealing with a broker turns out to be a better solution. Direct payday loan lenders are, as the name suggests, independent of any broker or middlemen and deal directly with the applicants. Having a broker for payday loans can be advantages or unwise, depending on what side of the prism you look at it.
Here we shall take a nonpartisan look at direct payday loan lenders and dealing with brokers in an effort to establish what can be of more benefit to you.
Direct payday loan lenders directly work with applicants and they do not have any need to pay a commission or any fees to a broker. This commission that would have otherwise been payable to a broker would be passed down to the applicant in the form of savings, most likely a better rate of interest and a favorable repaying term. In effect, applicants get to save a bit of money while dealing with direct payday loan lenders.
While dealing with a broker, an applicant doesn’t make any payment towards the commission of a broker directly but the brokering company does have its fees. These fees are borne by the direct payday loan lenders and the cost is passed down on to the customer. In effect, as an applicant you bear the brunt of the arrangement.
While dealing with direct payday loan lenders, customers may have less number of choices. A broker can bring together a number of offers from various companies which can make things competitive and an applicant may just get a better loan offer. However, brokers can also turn to preferential treatment and recommend direct payday loan lenders to an applicant that offer them the highest commissions. As you would realize there is a flip side to both coins.
With direct payday loan lenders, it may so happen that lack of research would lead you to pay higher rates of interest or if the company is not too customer centric then the apparent savings they make by not having to pay any broker may never be passed down onto you.
Brokers can offer a cascade of possibilities whereas with direct payday loan lenders you can think of creating a relationship. Both have their pros and limitations. At the end of the day, it would depend on the specific direct payday loan lenders or the specific brokers you are working with.