Online loans allow you to access funds fast from the comfort of your own home for various purposes, such as refinancing debt, making a big purchase, or establishing an emergency fund. Some people work with third-party lenders to get these loans because they can seem convenient. But direct lenders offer several advantages that may outweigh indirect lenders. This article will explain the differences between third-party and direct lenders, then explain a few reasons why getting an online loan from a direct lender is often a better idea.
What are direct lenders?
A direct lender is an institution that provides you with a loan out of their own funds instead of simply connecting you to a lender. They handle the entire process in-house, from the application to funding. Working with direct lenders can streamline the borrowing process while minimizing the number of companies with your information.
What are third-party lenders?
Third-party lenders don’t offer you their own loans. Instead, they work with other lenders to provide you with a loan. Third-party lenders could help you find more loan opportunities, but working with them can be slower or more expensive. Plus, they’ll share your information with more companies, leading to multiple lenders contacting you when you might not want that.
Benefits of getting online loans from direct lenders
Here are some advantages of working with a direct lender:
1. Fast and convenient
With direct lenders, you don’t have to work with any middlemen. As a result, you can get a loan faster and in fewer steps.
2. Lower fees and rates
Working with a direct lender involves fewer parties that need to cover their costs. This allows the direct lender to offer lower rates and fewer fees, which can save you money.
3. Keeps your information more secure
When you work with a direct lender, they may not share your data with other companies. This helps keep your information secure and prevents multiple lenders from contacting you with offers.
4. Communication is simpler
When you work with a third-party lender, you may have to juggle communications with multiple different companies. On the other hand, a direct lender is the only company you’ll need to keep in contact with. This makes the borrowing and repayment process simpler.
5. Higher approval chances
Direct lenders only have to deal with their own lending criteria, meaning your approval chances may be higher. Working with a direct lender also allows for a more personal lending relationship. This could give another boost to your approval chances.
The bottom line
Although third-party lenders could provide you with more loan opportunities, the costs involved might not be worth it. Plus, you’ll have to deal with your information spreading to other companies. On the other hand, direct lenders can approve and fund your loans quite quickly, and the personal relationship can help increase your approval chances. They’re also able to reduce those costs and pass those onto you as lower interest rates and fees. If you decide to work with a direct lender, make sure to compare multiple lenders and get prequalified to secure a loan with an interest rate that fits your budget.
Notice: Information provided in this article is for information purposes only. Consult your financial advisor about your financial circumstances.