A loan broker, or a mortgage broker, is the middle person in between a lender and a borrower. While a borrower can directly borrow from a lender, a loan broker can help the borrower decide which lender meets the borrower’s financial goals. Using a loan broker can help borrower save time, and can usually help the borrower find a lender with lower interest rate. Especially when the borrower is a business owner, using a loan broker is more efficient and beneficial. However, for some small businesses, or individual borrowers, borrowing directly from a lender can be more reasonable. This is because the loan broker usually charges a fee. This fee can be charged to the lender, but sometimes is charged to the borrower. The fee can be as high as 17% of the loan amount, and can be as low as 1% of the loan amount.
[Last updated in July of 2020 by the Wex Definitions Team]