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Understanding How Online Brokers Work
January can seem like a long month after the expense of Christmas and leaves some who didn’t budget carefully paying for Christmas for months to come.
Taking out a short term loan
For many who have already tightened their belts to the very last notch, the only way they can manage this shortfall is by taking out a short term loan.
Top tips
If your High Street bank won’t help out and you go online to source a loan, remember to read the websites thoroughly.
- Be sure to understand how the online lenders operate and what happens if you default
- Only borrow what you can afford to repay in the time
- Remember the amount you borrow and the length of time the loan is taken out for can affect the interest rate you pay for the privilege
- Another point to take into consideration is that a poor credit rating may limit your options and cost you more in interest
Understanding your online broker’s way of business
A broker or financial advisor operate in much the same way whether you are meeting ‘in the flesh’ or online. Essentially they look for a company willing to loan you money at the best going rate. They don’t actually loan you the money themselves.
Again if you are looking online, it is important that you look through all the details on their website to understand exactly what their offering is. You will find that most companies are completely transparent and explain exactly what they do.
Online loan scams
A scam is defined as a ‘fraudulent trick’ or a ‘swindle’ in the free dictionary online. So a scam could encourage you to part with your money for something that isn’t what it seems.
Once again we cannot emphasise enough how important it is to read everything including the ‘small print’ which includes Terms and Conditions and Frequently Asked Questions. Arm yourself with all the information you can. The chances are that being well informed will mean that there are no surprises further down the line.
How online brokers work
An online broker will look through their portfolio of suppliers to find a suitable company to loan you money. Some, like financial advisors, make their money by taking a commission from the company you do the deal with.
Other brokers like Loans Direct charge you a one-off membership fee. They do not take a cut from the eventual lender and can recommend a company to you on a purely objective basis i.e. not the one that will pay out most to them for your business.
The one off membership fee is well documented on their website but is still the area that surprises users most. It is not a Loans Direct scam but a fee taken so that they put their sophisticated digital programs to work to find you the most suitable personal deal.
Not only do they recommend a number of companies who will be prepared to loan you money and offer access to a site where you can check and clean your credit rating, but they will also search for local offers in other areas i.e. restaurant and utility deals.
Wendy Lin is a successful female entrepreneur who enjoys writing, art and travelling. When she’s not planning her next holiday, she’s found painting in her garden.
