When it comes to credit brokerage, it is a relatively new term. Your own bank is usually the first point of contact when it comes to lending. However, the house bank cannot always help you, which is why the question of loan brokering arises. It is a company that, according to the wording, provides loans to consumers. The activity itself is subject to the Union Consumer Directive and has been regulated since 2008. It is important to know that credit intermediation does not itself grant loans to consumers, but only mediates them.
The task of brokering a loan
A credit agency takes care of the borrower, and equally the credit institution, and brings both parties together. The placement agencies charge a fixed fee for the bureaucratic tasks involved. Loan seekers and borrowers, therefore, conclude a contract with the credit institution and previously one for the loan brokerage. If there is a payment, i.e. the actual lending, the loan brokerage was successful.
Important: Fees for the brokerage are only due when the loan has been paid out by the bank to the borrower. Before that, the legislation prohibits the intermediaries from charging fees.
Hidden terms behind loan brokerage
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Anyone who has never heard of credit brokerage until now may listen to the following statements: “Credit without credit company!”, “Express credit” or “Lending in just 48 hours”. Behind all of these terms and statements, there are often sophisticated credit intermediaries who advertise with quick and uncomplicated processing. The data can also be easily passed on by email and a query from the credit company lender is not necessary. At this point, many people are tempted to get a loan through such loan brokers if their own bank has had to refuse.
But: Loans are never granted without a credit company query. The phrase “loan without credit company” means that the loan taken out is not entered in a credit company. This has nothing to do with the fact that the lenders check the creditworthiness in advance. In order to find a reliable loan broker, one should rather look around the market carefully. Hidden processing fees are often hidden behind apparently serious offers.
How does credit brokerage work?
But if all banks and credit institutes query credit company and the house bank has rejected the loan request for precisely these reasons, how can the loan brokerage be successful? Most credit agencies use foreign banks, which do not provide credit company information and use current income to calculate whether the borrower can pay the current installments. In addition, reputable credit intermediaries have other methods to bring lenders and borrowers together.
However, if you couldn’t get a loan from your house bank, you shouldn’t go blue-eyed at a loan agency. Very often, borrowers are later unable to cope with a current loan and are in debt, which their bank wanted to avoid in advance.