“Super quick, I got lots of offers. All I had to do was choose which one! I went with Wisr because they were the cheapest. Thanks” - Angela
Written byShaun McGowan
If you’re thinking about getting a personal loan, one of your main considerations will be how you choose to apply - this affects your loan more than you think!
Most people will know that you can apply for a personal loan directly with your bank, and many will be aware of online lenders you can apply with online in a few minutes. But there’s a common third option that can be overlooked: using a personal loan broker.
A personal loan broker is not a lender. Instead, they work as a combination of advisor, facilitator, and guide between you and the lender with the most suitable personal loan offer.
Brokers help you find the most suitable loan offer by working with a number of different lenders, including the banks and online lenders mentioned earlier, and any other institute that can offer personal loans.
They’ll then use their knowledge of these lenders and what they offer to advise on the most suitable loan for your financial circumstances and needs, then oversee your application to improve your chances of approval.
First, let’s look at some of the best reasons to consider using a personal loan broker:
|Money Matchmaker™||Direct with Lender||Broker|
|Fees||$0||$0||up to $990|
|Impact Credit Score||No||Yes||No|
|Number of Quotes||Up to 11||1||1-3|
|Time to Quote||60 seconds||1-5 minutes||1-2 days|
|Phone call follow ups||No||Yes||Yes|
|Cost to apply||No||Yes||Yes|
Generally when you’re using a personal loan broker, the pros will outweigh the cons. However, not all brokers are the same, and a little research can help you avoid some common problems when acquiring a personal loan this way.
Two of the most common issues with brokers are:
Firstly, the best types of personal loan brokers will work on commission; this means they only make money if they find you a loan offer you choose to accept.
Secondly, the amount of money a personal loan broker can charge may vary, and sometimes this can be hidden in your loan agreement in the form of a fee charged by the lender.
At the very worst, brokers have been known to inflate the interest rate on the loan to increase their commission. This leads to the trustworthiness of a broker - always do your research and look for reviews of the person you are dealing with before investing your time and future financial stability with them.
Whether a broker is for you or not will depend on your understanding of the personal loan market, your ability to research your own options, and experience in determining the best deal on offer.
Here’s how you can make sure they’re delivering value to you:
Shaun is the founder of Money.com.au and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded CarLoans.com.au and Lend.
*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $30,000 over 5 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.