What is a Payday Loans Direct Lender?

A payday loans direct lender means that you have one company throughout the entire journey who can handle everything including the application process, underwriting, funding and collections and there are no other middlemen, intermediaries or brokers involved.

Working with a direct lender is desirable for most borrowers because they ideally want to know who they are working with from start to finish and do not want to be charged broker fees or be passed to several companies before finding the right one.

You may notice that the word ‘direct lenders’ comes up a lot and this is key to know which company you are working with. There are around 50 payday lenders in the UK who offer loans ranging from £100 to £2,500 which more than 2 million Britons use each year for emergency purposes and to tide them over until their next payday from work.

Proper Finance is a price comparison site and broker and we work with payday loans direct lenders, helping you to find the right company based on your loan requirements. We do not charge you anything for using our service, simply taking a small fee from the lender if your application is successful. 

What Are The Pros and Cons of Direct Lenders?

Pros

• You know the company who is lending you the money and making collections
• You are not confused by other middlemen or brokers
• There is only one company to work with and communicate with
• You will be not be charged unnecessary introduction or broker fees
• Greater transparency

Cons

• By working with one direct lender, you cannot be sure that you are getting the best rates
• Brokers, like Proper Finance, can place you with the best product and most likely to approve you. Alternative to payday loans such as a credit card or secured loan could be far cheaper and affordable

How is a Direct Payday Lender Different From A Broker?

A payday loans direct lender is a well known company and does all the lending themselves. You might have heard of companies like Drafty, Fund Ourselves or MoneyBoat, these are lenders who have a fund and are willing to lend money out to borrowers looking for loans of £300 or £500.

By comparison, a broker is the company, which could be a website or individual who introduces the borrower to the lender. A broker, such as Proper Finance, works with a number of payday lenders across the UK and is able to pair you with the right lender for you, who may be best suited to your requirements according to your credit status, loan amount or type of loan. 

Whilst direct lenders charge interest on the loans that they lend out, a broker makes an introductory fee from the lender for introducing the business to them.

How Can I Tell a Company is a Payday Loans Direct Lender?

There are certain words and cues that can help you spot a direct lender and this includes:

• Saying that they are a direct lender on their website (always double checked, a lot of brokers do this)
• Checking the FCA register to confirm that they are a lender
• They have a backlog of customers which is evident through reviews such as Truspilot and on social media
• The application form is on their website and they contact you personally to process your loan (it is not passed onto another company)
• They have a shop where you can visit and apply for a loan

What Should I Avoid and Be Aware Of?

Whilst there is very strict regulation in place by the FCA, one does need to be aware of scams and unscrupulous companies either pretending to be lenders or brokers.

Language Used By Brokers

A lot of brokers are trying to get your attention or web traffic and use words like ‘no credit checks,’ ‘instant funds,’ ‘guaranteed loans’ and ‘100% approval.’ 

Due to heavy regulation, every payday loan application is subject to a credit check and a loan can never be fully guaranteed or always approved. A typical application must undergo a series of credit and affordability checks to ensure that a customer is eligible to repay their loan on time and not fall into difficulty. 

A broker might use this language to entice you, but you need to be aware that not every application is funded.

Beware Scams

A number of scams have emerged by SMS and emails by people pretending to be direct lenders. It has been known that fraudsters have stolen or hacked the information of previous borrowers or people who have been declined, so you may find that an email or SMS comes to you out of the blue from someone pretending to be a legitimate payday loans direct lender.

Some things to look out of include:

• Poor quality email addresses – if the email comes from a Gmail or Yahoo account, this is not likely to be a legitimate company
• They ask for money upfront – a very common scam, the fraudster promises to pay you the full loan sum of £500 or £1,000, only once you have paid money into their account such as £200. Paying upfront for a loan should never be the case, you should apply, receive a contract and receive the full loan in one lump sum.