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There is a clear line between lenders and brokers and they have very distinctively different roles. In order to understand this better we will look at lenders first, then brokers. As payday loans are on the rise there are a lot of new companies and individuals joining this sector. The Financial Conduct Authority (FCA) has recently been investigating the activities of brokers and tried restricting them. There are numerous concerns about the payday industry nowadays and we will investigate why.
Payday lenders are companies who lend money to users until next payday or a specified date in return for a high interest. They specify the way they do business and the type of customers they lend money to – what is their age, whether they accent applications from people out employment and the amount of money they would lend to individuals. There are numerous lenders in the UK and their numbers are growing by the day. When applying for a loan with lenders you should always make sure you check if they are licenced to trade and if they are licensed to use personal information details. This information can be found in their website information page, FAQ tab or the bottom of the page on their website. Lenders own the money they lend to users.
Brokers are people or companies who arrange a transaction between customer and lender. They would often charge a fee prior to any transaction, which means that they could charge people for applying even if they do not get a loan. Brokers are often not your only choice if you need money because using them ads more fees to your transaction and you could be left feeling a bit confused over who you are dealing with when taking money. Brokers could use multiple lenders to provide you loan and sometimes the lenders might not be licensed or their APR could not be beneficial to your purposes. There are numerous brokers in the UK but the FCA has been trying to restrict them because they are deemed to be unsafe and the loans they provide would often spiral out of control. Brokers do not own the money they provide users with.
However, brokers do allow for some more competitiveness in the lending business. Using multiple lenders could give you exactly the right sum of money you need and a due date to fit your needs. The majority of brokers would try to provide you with a good deal so they would be able to remain in business. Nonetheless, there is tighter control over their activities so dealing with brokers is becoming increasingly safer than ever before.
Payday loans are taking over the lending sector and there is a reason for it. They are fast, offer competitive rates and there is amazing pool of choice. There are numerous lenders in the UK who would offer amazing rates and deals to new or existing customers. Brokers allow for even richer choice and are closely controlled so your loan is subjected to many different types of protection. Make sure you check who you are getting your money from and make an informed decision.