In the finance industry, there are two general types of lenders; direct and indirect. You might have seen on www.netpayadvance.com that there is a badge that states “State Licensed Direct Lender” and either not paid attention to it or didn’t know what it meant. Well, there is quite a bit that differentiates a direct lender from an indirect lender and there are reasons why direct lenders are the better choice.
What are direct lenders?
Direct lending in it’s purest definition is a “transfer of funds from the ultimate lender to the ultimate borrower,”. Basically, this means there is no interference from a third party between lender and borrower.
So, for example, if an applicant goes to www.netpayadvance.com and they complete the application and apply for a payday loan with Net Pay Advance, then that same customer will receive funds from Net Pay Advance and pay back their loan to Net Pay Advance.
What are the benefits of using a direct lender for your short-term loan? Well, number one, transparency. What you see on the website, the information that you get from the customer service center, and everything in between is all provided by one company.
Number two, it removes the middle man. An indirect lender is essentially getting the customer to the direct lender by way of their website or application. Not only does this allow more than one company to have the information found on your application, it could also mean hidden fees for the consumer. Make sure to read the fine print or ask for more information on the breakdown of fees that you’re paying when getting a loan of any kind. Information about fees should also be posted on the website or be shown in the loan documents when completing the application.
Why direct lenders are important
We have mentioned many times that they are unscrupulous lenders that are currently on the internet. These companies are either fraudulent in every aspect of their business and they are trying to scam unsuspecting customers out of their hard-earned dollars or they sell a customer’s information to spam lists.
This is an age of educated consumers. Google and social networks shed light on all companies that are out there and it’s in the consumer’s hands to do their research and decide where they would like to give their business. Choosing a direct lender means that you will be able to research and get more information about the company you are loaning with (or any sort of business) before the transaction. That way you can ensure that your information is safe and not being sold or added to a massive spam contact list.
Reasons like those listed above are why it’s so important for consumers to do their due diligence when shopping online, but especially when applying for a loan online. Consumers that apply with indirect lenders have no control over to whom or where their information is going. This could result in at best, getting a loan from a legitimate lender or at worst a bombardment of unsolicited emails and/or phone calls. Or even worse your information getting in the hands of a fraudulent company.
How to find direct lenders
Direct lenders can be easy to spot, but consumers need to pay attention.
Most direct lenders like to advertise the fact that they are a direct lender. They will do so by advertising “Online Direct Payday Loan Lender” or something similar. Furthermore, there will be obvious mention of this on their website, or at least there should be. Net Pay Advance has a direct lender badge and Better Business Bureau icon and link under the first image on every page of our website.
Direct lenders also won’t try to grab you with “Loans up to $1500” or similar slogans where the “up to” is in very small font and misleading. Indirect lenders sell information to an entire network of lenders that have all different kinds of products. They make false claims that they can get all applicants up to a $1500 loan.
Finally, we come back to transparency. Direct lenders will have websites where information is plentiful. FAQ section, contact us page, along with many other support pages so that the consumer can get all the information he/she needs or wants to find about the company. Since an indirect lender is working with multiple lenders they are unable to get you contact information for every company or each companies’ policies.
For more information on how to protect yourself from fraudulent lenders, check out our security page.