Difference between broker and lender
Broker vs Lender:
Who is a broker?
A broker can be defined as a person who executes a trade on behalf of others. This is a profession which requires the brokers to have the certifications and be duly licensed to perform the functions of his duty. They can also be defined as sales representatives who introduce the products or the services of a company to its clients on behalf of the company. Brokers usually have direct communication with the clients and they are responsible for introducing and negotiating the best deals possible for the clients. Brokers often work by themselves and they have their own customer base whereas brokers can also function as a part of a firm.
Their ultimate aim is to maintain a large customer base and they do this by catering personalized services to their clients and keeping their customers informed regarding the latest improvements on the product or the stock price fluctuations at all times.
In terms of money lending a broker offers the loan products provided by various investors, thus serving the customer and the investor a mediator who shall make their day to day functions much easier.
Who is a lender?
A lender is someone who lends money on an interest rate to a debtor. Two types of lenders exist such as retail lenders and wholesale lenders. While retail lenders commence the loan process by themselves, wholesale lenders commence by hiring contractors or brokers who will act as a mediator in finding potential customers, processing the loan, etc.
It is a well known fact that different lenders have different interest rates. Also, large lenders who possess a large network are also referred to as portfolio lenders and depository institutions. Thus, credit unions, commercial banks and savings, and union and loan associations can also be referred to as portfolio lenders.
What is the difference between a broker and a lender?
Brokers and lenders both require licenses and proper documentation in order to operate as brokers or lenders. Yet, while a lender lends directly to the customer, a broker acts as a mediator between the lender and the customer in selling loans and representing different lenders.
Also, while a wholesale lender hires brokers to perform the documentation, counselling, etc, the broker prepares all the necessary documentation such as details regarding credit reports, different verifications such as employment, assets, appraisal and transactions. The file is then handed over to the lender who will examine it and lend the amount of money as necessary.
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