Preliminary costs are charges that some credit intermediaries charge for when they start working. These are not permitted since loan brokers can only charge an appropriate fee if they are successful. This legal principle prohibits credit intermediaries in addition to issuing an invoice without any intermediation success, and also the use of 0900 telephone numbers for contacting.
Reasons for hiring a credit broker
Reputable credit brokers are free of charge and, thanks to their strong buying power, can obtain loans in difficult cases, even if the applicant has been rejected in the case of direct applications. Best banks generally limit lending without Credit bureau to directly submitted applications to between $ 3,500 and $ 5,000, while credit intermediaries can also negotiate larger amounts for their customers.
When it comes to mortgage lending, intermediaries often achieve lower interest rates than the bank charges for direct lending because they broker a large number of loan contracts. Financial institutions grant them and their customers special conditions. When taking out real estate loans through a reputable credit broker, the credit institutions often assume their remuneration, whereas in the case of consumer loans this is generally to be paid by the borrower.
Recognize reputable credit intermediaries
The distinction between reputable and untrustworthy service providers is easy because reputable credit brokers work without any upfront costs and only charge their customers reasonable performance fees. A successful loan brokerage is when the service provider submits an acceptable offer to his client and the client actually concludes the loan agreement with the proposed bank. The seriousness of a credit intermediary also means that he or she does not advise an applicant to take out insurance, unless it is indispensable for the lending and only becomes effective when the loan is paid out.
Installment protection insurance improves the borrower’s creditworthiness and can actually be a prerequisite for a loan approval. In this case, the joint conclusion of a credit contract and an insurance contract is permitted. However, the demand to conclude insurance contracts regardless of the loan payment is not serious.
The fact that the reputable credit broker acts without any upfront costs also motivates him to successfully obtain credit, because in the event of a failure he bears the costs incurred. On the other hand, if dubious credit intermediaries charge upfront costs, there is a risk that they only want to collect them and are not seriously interested in successfully brokering a loan.