Direct lender loans explained
If you’re thinking about searching for a loan, you might wonder where to start.
From payday loans to short-term loans, direct lenders to credit brokers, our guide explores some of the options that may be available to you.
- Q1 - What is a direct lender loan?
- Q2 - What’s the difference between using a direct lender and a credit broker?
- Q3 - Can I get a direct lender loan with Growing Power?
- Q4 - Could I apply for a direct lender payday loan?
- Q5 - Bad credit direct lender loans
- Q6 - Direct lender loans for people with no credit history
- Q7 - Who is the best direct lender of loans in the UK?
- Q8 - Can I get a guaranteed direct lender payday loan?
- Q9 - Is it free to use a credit broker?
- Q10 - How does a credit broker work?
- Q11 - What to do if you can’t afford to repay your loan
What is a direct lender loan?
As the name suggests, a direct lender loan is a sum of money that is applied for directly with (as well as provided by) a lending company.
What’s the difference between using a direct lender and a credit broker?
When you apply for a loan with a direct lender, you will undergo an affordability check for their product(s) only. An affordability check will be in the form of either a hard search or Open Banking.
A hard search is an in-depth look at your credit report and history. It will be visible on your credit file for up to 12 months and will affect your credit score. Open Banking is a safe and secure procedure that, with your consent, allows the lender to view your recent financial history through your online banking account.
A credit broker, like Growing Power, has access to a range of lenders, meaning the broker is able to scan their panel for a loan that could be suitable for you. Growing Power uses soft search technology to search for a loan, which won’t impact your credit score while protecting your credit file from multiple hard searches.**
Can I get a direct lender loan with Growing Power?
Growing Power is a credit broker, not a direct lender.
We work with a large panel of direct lenders, who offer short-term, personal loans from £100 to £10,000. Depending on the amount of money you apply to borrow, you can repay your loan across terms between 3 and 60 months.
All the lenders on the Growing Power panel are authorised and regulated by the Financial Conduct Authority (FCA).
Ready for a quick loan?
Could I apply for a direct lender payday loan?
You might be able to find a direct lender of payday loans, although it’s important to understand that this might not be your only choice when searching for a loan.
A payday loan must typically be repaid within a month. If you’re unsure whether a payday loan is right for you, you may wish to think about a short-term loan as an alternative. A short-term loan will come with a wider range of repayment terms and will allow you to spread the cost of the money you borrow.
Bad credit direct lender loans
When you have bad credit, finding a loan could be difficult. Some lenders, including several of those on the Growing Power panel, specialise in loans for people who might have struggled with credit in the past.
You should bear in mind that bad credit loans could come with a higher rate of interest, and it might not be possible to borrow as much money as you need.
It’s very important to stop and think before you apply for a bad credit loan.
- Is a loan the right option for you?
- Can you afford to make the monthly repayments?
- Are there other options you could consider, such as borrowing money from family and friends, or if your need for funds isn’t urgent, could you save up instead?
Direct lender loans for people with no credit history
Having no credit history is sometimes referred to as having a ‘thin’ credit file. A thin credit file usually occurs in people who’ve never paid bills or borrowed credit.
While having a thin credit file isn’t necessarily a negative thing, you might find it challenging to find a lender willing to consider your application. This is because, with no evidence of how you’ve managed credit in the past, lenders may view your application as a risk.
Some UK-based lenders specialise in loans for people with a thin credit file, and Growing Power is proud to work with a number of these lenders.
Who is the best direct lender of loans in the UK?
There is no one set answer to this question; everybody’s financial situation is different, and a lender suitable for one person might not be the right fit for another.
Only you can decide which lender is right for you.
When searching for a lender, you may wish to take the following into consideration:
- What sort of repayment terms do they offer?
- Is it possible for you to apply for the amount of money that you need?
- Is the interest rate affordable for you?
- What sort of reviews do they get?
Can I get a guaranteed direct lender payday loan?
You should be wary of any company offering ‘no affordability check loans’ or ‘guaranteed loans’.
In line with guidelines set out by the FCA, all responsible lenders in the UK are required to carry out an affordability check on anybody who applies for a loan. The result of the affordability check will help the lender in their decision whether to lend you the money you’ve applied for.
If you decide to apply for a loan, you may wish to make sure that the lender appears on the FCA register, which you can search here.
Is it free to use a credit broker?
Here at Growing Power, we don’t charge any fees for our service and all quotes are no-obligation.
How does a credit broker work?
We’ve detailed each step of the Growing Power journey below.
1. Tell us how much money you need to borrow, and for how long. Next, fill out our online form; this should take no longer than five minutes to complete.
2. Using soft search technology, Growing Power will look at your financial history with no impact to your credit score. In just 60 seconds, we’ll scan our panel of lenders for a suitable loan.
3. If you’ve been matched with a lender, you’ll be redirected to their website, where you can decide whether you’d like to make a full application. If you do choose to go ahead with the loan, the lender will carry out an affordability check, which will include either a hard search or Open Banking.**
4. If the lender is happy with the result of their affordability check, you’ll be sent a loan agreement, which you should take the time to read through carefully.
5. Your lender will let you know when you can expect your money to be sent. Some of the lenders on the Growing Power panel could send your funds on the same day as your application is approved, although you should bear in mind that the time it takes for the money to appear in your account will depend on your bank’s policies and procedures.
What to do if you can’t afford to repay your loan
If you’ve taken out a loan that you’re struggling to repay, you should get in touch with your lender. Remember, your lender is there to help, and they will not judge your situation. They’ll be able to discuss any options that may be available to reduce some of the pressure.
You can access free, confidential money and debt management advice through charities and organisations such as StepChange, MoneyHelper, Citizens Advice, and National Debtline.
**If you’re matched with a loan through Growing Power and choose to make a full application directly with the lender, either a hard search or Open Banking will be carried out by that company. Please be aware that a hard search will remain on your credit file for up to 12 months and multiple hard searches within a short period of time could have a negative impact on your credit score.