Confidence with Licensed Direct Lenders

direct road

The first things you need to know before shopping for a loan are the difference between direct vs indirect lenders and the importance of using a licensed lender.

Explore this Guide:


What are Licensed Lenders?


Licensed lenders are lenders who have a specific license to lend with the federal and state government.


Licensed lenders have to follow both state and federal government requirements. If a lender is licensed, then you know they follow important regulations to keep their borrowers safe.


How Do Lenders Get Licensed?


To get a license, lending companies need to meet specific requirements, apply and get approved, and keep their services up to date with state and federal regulations.


Lenders apply for this license with the Nationwide Mortgage Licensing System (NMLS), the Department of Business Oversight (DBO), the Department of Financial Institutions, or the Residential Mortgage Lender License (RML).


To meet the strict approval process’s requirements lenders need the following:

  • A detailed business plan
  • Disclosures
  • Certificates of authority
  • Organizational charts
  • Financing requirements
  • Background checks for everyone involved in the lending
  • Application fees ranging around $400
  • Surety bonds


Lenders who specialize in dealing with mortgage loans have added special requirements like getting approval from the following organizations:

  • Federal Housing Administration (FHA)
  • Veterans Administration (VA)
  • Farmers Home Administration (FmHA)
  • Government National Mortgage Association (Ginnie Mae)
  • Federal National Mortgage Association (Fannie Mae)
  • Federal Home Loan Mortgage Corporation (Freddie Mac)


Licensed lenders also have to deal with regular state and federal audits that routinely make sure licensed lenders are following all laws and regulations. This means they have to keep very detailed and organized financial statements and documents.


When a lender is licensed, you know as a borrower that the lender is being held by a higher standard.


What are Direct Lenders?


Direct lenders offer loans directly.


Some examples of direct lenders include banks, credit unions, and financial institutions like Check City.


At a direct lender, borrowers apply and receive loan funds all with the same company. This includes payday loans online, bad credit loans, personal loans, cash loans and more.


What are Indirect Lenders?


Indirect lenders offer loans indirectly.


Another term for indirect loans and indirect lenders is dealer financing. This is because working with indirect lenders is like going to a loan dealership where lots of different loans are available and a salesperson is going to try and sell you a specific one.


At an indirect lender, borrowers apply for a loan with the indirect lender, who then gives that application to many other third-party lenders in order to get a client their loan.


Direct Lenders vs Indirect Lenders


Like with all lending options, there are pros and cons to both direct and indirect lenders.


Indirect Lenders have the interest of many different lenders to take their attention away from you and your needs as a borrower.


Payments and interest rates for indirect loans are often higher because you’re paying for the extra work of the loan intermediaries and the actual lender.


Your creditworthiness will be a higher priority to get a loan with an indirect lender since indirect loans are higher risk loans than direct loans.


Borrowers who seek indirect lenders are often stumped on what lender to use and thus seek the help of a loan intermediary.


Direct Lenders often have lower interest rates and payments than indirect lenders do.


They also often come with better payment plan options because they can offer more flexibility since they are the actual lender.


Customers often experience less pressure from direct lenders because direct lenders don’t have to make loan sales for other lenders the way indirect lenders do.


You also won’t have to deal with loan negotiations that can get messy and complicated with a direct lender. Everything is just written out clearly ahead of time so you know the kind of loan you are signing up for before you even apply.


Your private and personal information is also more protected with a direct lender since direct lenders don’t send your application information to multiple lenders like indirect lenders do.


Instead, your application information just goes to the direct lender.


Business Lending vs Consumer Lenders


Business Lenders lend funds specifically to businesses while Consumer Lenders lend funds to individuals.


Some lenders offer loans to both businesses and consumers while other lenders only offer one or the other.


Direct Lender Loans


A direct lender loan is the best type of loan because you’ll be dealing directly with the lender instead of with a third-party loan intermediary.


A direct lender loan may be able to get you better interest rates, better payment options, more flexible loans, more personal customer service, and more transparent loan terms.


Direct Lender Installment Loans For Bad Credit


Direct lenders who offer installment loans are more likely to approve loans for borrowers with bad credit.


Because they have a direct relationship with the borrower, they can offer other forms of loan security, like with signature loans or title loans. That way, borrowers with bad credit still have loan options available to them too.


Guaranteed Payday Loan Direct Lender


Payday loans are a type of loan designed to help borrowers get to their next paycheck sooner.


Payday loans are a quick and small loan designed to be paid off quickly. The purpose of a payday loan is to give customers quick, emergency finance options for when they need them most.


The payday loan process is much faster with a direct lender. A speedy approval and funding process for payday loans is essential to getting customers the funds they need right when they need them.


Direct Lender Online Installment Loans Instant Approval


When you work with a direct lender you can sometimes get instant approval or preapproval for loans.


That’s because you are working directly with the actual lender so they can quickly make those loan application decisions for you.


Indirect lenders don’t usually have the power to grant instant approvals or preapprovals for loans because they are not the lender.


Check City is a Direct Lender


Is Check City a direct lender? Yes!


Since Check City is a direct lender you can take all your loan questions and concerns to us directly. You can also get some of our loans as quickly as the same day with direct deposit or by coming into your nearest Check City Store.


Check City is a Licensed Lender


Is Check City a licensed lender? Yes!


You can take a look at Check City’s lending licensing by visiting our Responsible Lending Statement Page or our State Licensed Lender Page.


Because Check City is a licensed lender we have to meet all the important requirements set to keep our lending secure and safe. And we’re glad to do it!


In Conclusion,


The best loans come from lenders who are both direct lenders and licensed lenders who comply with both the state and federal rules and regulations.


This is the best way to make sure your loan comes with the best terms and the most security.



The Balance: Small Business. “What Is Lending? Definition and Examples of Lending,” by Jean Murray.

Utah Department of Financial Institutions. “Consumer Lending.”

Investopedia. “Mortgage Broker vs. Direct Lender: What’s the Difference?” by Zina Kumok. “Loan Officer License Information: Everything you need to jump start your career and earn your Loan Officer License!”


written by Kimber Severance, Check City Copywriter

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