Loan offers from most banks in one place. Help in choosing the most favorable loan for the company. And all this is completely free. That’s how credit brokers work. Too beautiful to be true? A bit like that.
If you do not have the time, strength, knowledge or determination to compare offers from different lenders, credit brokers may appear to be a real salvation.
Leave the number, we will call you back
When you take your online loan search for the company yourself, the first impression will be promising: declarations of attractive interest rate, low commission, quick decision. However, if you start to check what exactly is behind them, it often turns out that they are calculators or contact forms. Do you want to know something about our offer? Leave the number, we will call you back.
Banks are reluctant to reveal complete information about their products on the website. You will learn the key parameters – commission or interest-only during direct contact with a bank employee. And that means you have to invest time.
The time that you probably still lack.
Multiply this by 3-4 banks where you would like to check the offer and suddenly it turns out that such “research” would mean the necessity to postpone some other important matters. And this is just the beginning – the real obstacle course (and this combined with the marathon) can be submitting the application (including completing the documentation) and waiting for the decision.
In the meantime, one visit to an intermediary is enough for him to select and present you the best offers and – at least initially – to assess your creditworthiness with each of the lenders. If you decide on a specific offer, you can usually also count on assistance in completing the formalities. Fast, professional and comfortable. And you do not incur any costs.
The broker also wants to earn
A loan broker does not work with a good heart, but – like the vast majority of businesses – to make money. It is true that it does not receive any remuneration from you, but it earns on the business loan granted to you.
The salary is paid to the broker by the bank (the creditor). He obviously also wants to earn, so he calculates the interest rate, fees, and commissions so that they are higher than the cost of granting the loan. These, in this case, are increased by the remuneration for the broker. So, in the end, it is you who cover the costs of the broker’s remuneration.
How much do brokers earn from you?
In addition, it is not known what the salary is. Generally, credit brokers do not need to disclose how much the lenders will pay them for brokering the loan. This, unfortunately, has its consequences. Intermediaries are the most profitable to offer the loans on which they earn the most, and this does not necessarily mean the best loan for you.
Of course, this does not necessarily mean unceremonious “pressing” the most profitable loan for the broker. However, it may turn out that among the offers that will be presented to you will not be those for which the lenders pay the least.
Lack of transparency is a significant disadvantage of the model that operates on our market. Lack of invoice for brokering service is, unfortunately, a psychological advantage. And quite illusory.
Interestingly, for some financial products, intermediaries must disclose the fee for handling transactions. This is the case, for example, with investment funds (this is regulated by the MIFID II Directive) or mortgage loans (in 2017 such an obligation was introduced by the Mortgage Credit Act). When introducing these provisions, it was not without resistance from the industry.
Perhaps one day we will see similar regulations for other loans because the transparency of costs leads to their decrease. For now, it remains only to count on the fact that the rates of remuneration from individual lenders are even.
However, in order not to paint the picture of an intermediary loan: the fact that the agent’s remuneration is “hidden” in the price of the loan does not necessarily mean that it is more expensive than in the bank. Although the bank has to pay the agent for service, on the other hand, it does not have to pay the same for its employee. The balance should, in this case, go roughly zero.