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With countless personal loan options on the market, finding the right one can be overwhelming and time-consuming. One solution is to use a personal loan broker. Learn about their role and the benefits and drawbacks of using their services to help you make informed decision when looking for a personal loan.
What are personal loan brokers?
Personal loan brokers are professionals who help those looking for a personal loan find the best deal to suit their needs. Like mortgage brokers, they act as intermediaries, working with a panel of lenders to find finance solutions for their clients.
When choosing a personal loan finance broker, there are a few things to be aware of:
- Lending panel:Â brokers partner with a range of lenders, but not every lender on the market will be included in their panel. Choosing a broker accredited with a wide range of lenders gives you the widest selection of personal loans, thus maximising your chances of finding an offer that suits your personal circumstances.
- Fees:Â personal loan brokers will typically charge you for their services with a brokering fee. This will usually be a small percentage of the total loan amount (less than 5%) or a set sum but, depending on the size of your loan, this could be hundreds of dollars.
- Commission: lenders will often pay brokers a commission, which is a fee for successfully matching a borrower with the lender. Borrowers should be aware of the commission brokers earn because it can impact the recommendations brokers make.
How do personal loan brokers compare to getting my loan direct?
The primary alternative to using a personal loan broker is searching for a loan yourself and applying directly to the lender. This has both advantages and drawbacks.
If you do it yourself, you have complete control over the process. You can look at any lender you choose and make all decisions independently. On top of this, you won’t have to pay a fee when applying, which can save a substantial upfront cost.
However, it is important to read a lender’s eligibility criteria before you apply and ensure you meet their requirements, as applying and being rejected can damage your credit score. Using a broker can help you avoid this scenario, as they typically pre-screen lenders to match you with ones most likely to approve your application. This can be especially helpful if you face more challenging circumstances, such as having bad credit or being self-employed, and save you from making unsuccessful applications. You will also benefit from their expertise and guidance, and they may be able to find better deals than you would on your own.
One of the biggest advantages of using a broker is the time and effort saved in comparing offers. Your broker will compare interest rates, fees and other important factors to find a range of offers suited to your circumstances, taking much of the guesswork out of applying for a loan.
What are the pros and cons of using a personal loan broker?
Using a broker to help you secure a personal loan can benefit you in many ways:
- Convenient: personal finance brokers handle much of the legwork, saving you time and effort in searching for the best loan for your needs.
- Industry experts: brokers have extensive personal loan knowledge and experience, enabling them to provide valuable insights and advice.
- Tailored options: personal loan brokers can offer personalised recommendations based on your specific situation and preferences.
- Protect your credit score: by identifying suitable loans, brokers can help you avoid multiple credit inquiries, which can negatively impact your credit score.
However, there are also potential drawbacks:
- Extra fees: brokers often charge additional fees, which can increase the overall cost of securing a personal loan.
- No guarantees: even with the help of a broker, there is no guarantee that you will get the best rates or that your application will be approved.
- Limited lender choice: brokers may only work with a select group of lenders, potentially limiting your options when looking for a loan.
- Commission prioritised: some brokers may prioritise products that offer higher commissions, which might not always align with your best interests.
With these points in mind, it’s important to weigh up whether a broker service would be the best fit for your situation before making the decision to use one.
How do I find the best personal loan broker?
There are a number of key areas you should look at when comparing personal loan brokers. It’s important to choose one that aligns most closely with your needs and can offer you the best personal loan deals. You should consider the following:
Suite of lenders available
The number of lenders your personal loan broker is accredited with is perhaps the most important element in choosing the best available option for you. The more lenders that your personal loan broker is accredited with, the more choice you’ll have for personal financing and, as such, the greater the chance of finding the perfect loan to suit your needs. For example, a broker accredited with five lenders is less likely to be able to find you the best deal than one with more than ten lenders.
Online or in person
Most personal loan brokers operate in the online space, which makes finding one much easier and more convenient overall. An online broker sidesteps the need for appointments to be made and physical documents to be sent to an office; rather, everything is conducted in a safe online space, and you can attend to it whenever you’re free. However, there are still face-to-face brokers available for those who prefer this setup. Your preference in this regard will inform your ultimate decision on which personal loan broker to choose.
Processing speed
You may want or need your funds turned around quickly to access your personal financing sooner, so you could look to personal loan finance brokers who can do that. Each broker will be different in terms of how quickly they can get your loan approved, so you should do your research in this area. Typically, online brokers are able to get loans approved at a faster rate than those dealing with physical documentation.
How can Savvy help me with my personal loan?
When it comes to securing a personal loan, Savvy can support you every step of the way. Our dedicated team will do all the heavy lifting, working with a broad network of lenders across Australia to find the best loan options tailored to your needs and circumstances. With our streamlined process, you can find and secure your loan quickly, without the stress of searching on your own. Here’s what you need to do:
- Complete our easy online application form
Start by filling out our straightforward online form. You’ll need to provide details about yourself, your financial situation and the type of loan you're looking for, which should take just a few minutes to complete. - Compare loan options with Savvy
Once your enquiry is submitted, we’ll search for available loan options from our partner lenders. A member of our team will contact you to help choose the best loan for your situation. - Submit your documents and apply
After you’ve made your choice, simply provide the necessary documents through our secure online portal. We'll take care of the rest and formally submit your application. - Receive approval and sign your contract
Our process is quick and you can be approved within hours – you’ll just need to sign your loan contract electronically once your formal approval comes through. After that, your funds will be transferred, potentially hitting your account as soon as the same day.
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Written by Fact checked
This guide provides general information and does not consider your individual needs, finances or objectives. We do not make any recommendation or suggestion about which product is best for you based on your specific situation and we do not compare all companies in the market, or all products offered by all companies. It’s always important to consider whether professional financial, legal or taxation advice is appropriate for you before choosing or purchasing a financial product.
The content on our website is produced by experts in the field of finance and reviewed as part of our editorial guidelines. We endeavour to keep all information across our site updated with accurate information.
Approval for personal loans is always subject to our lender’s terms, conditions and qualification criteria. Lenders will undertake a credit check in line with responsible lending obligations to help determine whether you’re in a position to take on the loan you’re applying for.
The interest rate, comparison rate, fees and monthly repayments will depend on factors specific to your profile, such as your financial situation, as well as others, such as the loan’s size and your chosen repayment term. Costs such as broker fees, redraw fees or early repayment fees, and cost savings such as fee waivers, aren’t included in the comparison rate but may influence the cost of the loan. Different terms, fees or other loan amounts may result in a different comparison rate.
