The best direct lender is that one that offers you a deal that you can pay without having problems. The line of credit they offer will actually help you overcome the urgencies or situations you are passing through, instead of complicating it even more.
Nowadays there are more lenders than ever. You are able to enter on the internet looking for loans and with just one search you can find a lender that suits your needs. In this article, you will learn which are the best direct online lenders you can find out there.
After you’ve read this you will know:
What is a direct lender?
What is the difference between an online direct lender and a broker?
Is it safe to deal with these organizations?
What is a direct lender?
A direct lender is a financial institution or a private organization that is able to lend you money without any third party. You can request, among others, these kinds of loans:
- Student loans.
- Personal loans.
- Mortgages.
Some organizations are specialized in a certain type of loan, like mortgage lenders, and they cover all the processes, from giving funds the first time to refinancing. In recent times, you can find many of them on the internet and complete a loan application to know if you qualify for their loans.
Multiple lenders will also have minimum requirements for the application. These can be:
- Having a decent or minimum credit score.
- Not having a high Debt to Income Ratio.
- Have a steady source of income or proof of income.
- Have savings to pay back the loan in case you don’t have enough money to pay back.
These companies can still decline your application in the lending process if they see something they don’t like about your finances.
Now, have in mind that you shouldn’t do business with every mortgage lender or credit union that you find out there. Before, it’s mandatory to do research about the institutions you are going to deal with.
Direct lender vs Brokers
We already described what a direct lender is, but what about brokers?
The broker is a financial professional that puts together borrowers and lenders and closes a deal for you. It’s a financial middleman that is able to find different choices for you to make a decision. They don’t use their funds for financing, they only connect you with the right organization, like banks or the best mortgage lenders.
You need to be careful though, because there are a lot of brokers that aren’t trustable and may increase the lender fees, among others, to get a profit out of the deal.
Are direct lenders trustable?
When it comes to security, a direct lender will be more secure than a broker. They will always send the money straight to your bank account and your payment will also be withdrawn from it when the due date comes.
Refinance is also better to set up since you will deal with them at once and there is a chance for you to get better rates.
How to choose the best lender?
There isn’t a 100% secure guide to find the best lender for you. But, here we give you a guide to understanding how to choose a lender according to your needs:
Increase your credit score
Before applying for a loan, you should always have in mind your credit score. When you’re with a lender, this will help them determine if you are trustworthy enough to invest in you.
Set up your budget
When you are looking for a loan, whether it is a mortgage loan, personal loan, etc, you need to have in mind the budget you can afford to pay back. There are some online lenders that could offer you a large sum of money that you aren’t able to pay back.
As a borrower, it’s a good financial move to request an amount that you can easily pay even without having a job.
Find your loan options
There are tons of companies that are willing to fund you, in fact, if you look for “online mortgage lenders” on Google you will get thousands of results in a second. But you can’t choose them all.
It’s better if you choose 2-4 lenders and then start research to know their differences and select one of them.
Compare rates and fees
Once you’ve chosen the lenders of the market you may choose, you need to compare their fees and rates. You may be surprised to see that those values change a lot when you look carefully.
Read the terms of the agreement
Before making business with a lender you are able to read the terms and conditions on their website. If you sign an agreement without having read it and it is sent to Underwriting, you may have trouble paying the loan back if the lender has some clauses that you didn’t see before.
