What Are Key Differences Between Lender And Broker

Anyone can feel the need of loan at any point of time in their life. The need for financial assistance to bridge the scarcity of funds can be for a short term or long term. There are two popular ways to meet your financial needs, a broker or a lender. Both of them differs from each other on a few aspects.

Who is a lender and what are its types?

A lender provides funds to the debtor directly. There are mainly 2 types of lenders, one is the retail lenders and other is wholesale lenders. Retailer is lenders who start the loan process on their own and wholesale lenders are the ones who recruit brokers/ contractors for the loan sanctioning purpose. Examples of lenders are large banks, commercial banks, credit unions, and union and loan associations.

Who is a broker?

A broker can be thought of as a commercial agent who provides the loan products that are provided by different investors. He sells loans and also represents different lenders. A broker either performs his functions as a freelancer or is hired by the lender.

His goal is to look for potential customers who are in need of a loan. A broker earns a varying amount of commission, the amount of which depends on the type and number of loan products that they sell to customers.

Argent Direct is a popular firm that has been in the field of loan lending since several years. This company aims at settling short term financial contingencies of their clients without considering their credit condition. This feature makes it unique and superior than other financial institutions that only sanction loans to people with good credit condition.

What is the difference in the working of a lender and a broker?

Large lenders have a solid network of retail as well as wholesale lending. They recruit several brokers to provide their loan products to needy customers. A broker prepares a file of information that lists all details pertaining to credit reports and verifications, such as assets, employment, transactions and appraisal. This file is handed to the lender who sanctions money after its completion. It must be noted that both lenders as well as broker need to have a valid license in order to execute its services.


There are the major differences in the way a lender and a broker work. Understanding them will help you make the right choice for funding.

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