Intermediary means intervening, establishing a link between two parties. Thus, credit intermediation is the act of seeking to reach an understanding between the consumer and financial institutions.
What is the advantage of using a credit intermediary when you can make your request directly to the bank? At first glance, it may seem that it would be quicker and simpler to go directly to the bank, but the truth is that having an intermediary can save you time, money and worries.
A credit middleman can help you speed up the loan application procedure if you need one. This article will help you learn how to spot a scam.
The procedure of requesting a credit takes time and patience. Banks and credit institutions demand a variety of documentation in order to assess customers' financial situations and determine if they are eligible for funding.
Other documents, such as the IRS declaration - Personal Income Tax, salary receipts, or your credit score, are necessary in addition to personal documents, especially when applying for housing credit. Furthermore, in addition to obtaining favorable terms, you must compare proposals from numerous banks. Due to these factors, the procedure might be lengthy and time-consuming.
You can apply for credit in one of two ways: at a bank or through a credit middleman. There are over 4,000 credit intermediation firms in Portugal that aim to make life easier for consumers, especially when it comes to loan applications and learning about the many options available based on their profile.
After all, what is a credit intermediary?
An intermediary, as the name implies, is a person or corporation who acts as a go-between, between the client and the bank or credit institution. Credit intermediaries must be registered with the Banco de Portugal and get regulatory approval to operate in the market.
Credit intermediates are quite popular in car dealerships, real estate agencies, and home appliance and electronic equipment retailers, for example. However, there are intermediates who have their own businesses.
Credit intermediaries, in practice, handle the entire credit giving process, however they are not the ones who give the finance, but rather the credit institutions with which they collaborate.
A credit intermediary is not permitted to extend credit or to intervene in the promotion of other banking goods or services, such as term deposits or payment services, according to Banco de Portugal.
Credit institutions, financial organizations, payment institutions, and electronic money institutions operating in Portugal are permitted to provide credit intermediation services as long as they do not operate as lenders in the same credit agreements.
Because credit intermediates are already familiar with dealing with bank loan applications and are familiar with all of the procedures, the process finally becomes faster than if the consumer handled everything alone.
Types of credit intermediaries
Credit intermediates are divided into three categories by the Banco de Portugal, and they cannot work in more than one of them.
1. The linked credit intermediaries function on behalf of the lender or a group of lenders with whom they have engaged into a contractual arrangement.
2. Ancillary credit intermediaries supply goods or services and serve as a credit intermediary on behalf of and under the complete and unconditional responsibility of the lender or several lenders in order to sell the goods or services they offer.
3. Non-linked credit intermediaries operate without having signed a contract. These intermediaries enter into an intermediation contract with the customer, outlining the terms and circumstances of providing credit intermediation services.
It's also worth noting that in your firm or denomination, only credit intermediaries can use terms like "credit intermediary," "credit broker," "credit agent," or equivalents. However, the regulator claims that particular terms can only be used in specific categories.
Only unbound credit intermediates, on the other hand, may use language like "independent intermediary" or "independent advisor" to indicate the lack of a link with a lender or group of lenders.
As a result, related and ancillary credit intermediaries allowed to provide consulting services are prohibited from using the phrases "consultant," "consulting," "recommendation," and the expressions "credit adviser," "credit advisor," "financial advisor," "financial advisor," and similar terms.
How do i know who's authorized?
Banco de Portugal requires all credit intermediates permitted in Portugal to register. As a result, you can consult the regulator's website for a list of authorized credit intermediaries.
The Banco de Portugal publishes a list of credit intermediates and other credit institutions, financial companies, payment institutions, and electronic money institutions that provide credit intermediation or advisory services in connection with credit agreements in which they are not lenders.
If you are unable to locate the company or individual's name, stop the process and seek clarification.
Credit intermediaries must also give consumers with the standard credit information sheet (FIN), which is a document that summarizes the key features of credit and provides pre-contractual information about the credit intermediation service. You can only review all the details of the credit and confirm its authenticity this way.
Furthermore, whereas linked and auxiliary credit intermediates are prohibited from charging consumers commissions, unbound credit intermediaries are permitted to charge for credit intermediation or advisory services. If they do, they must specify in the contract the price of the services to be given as well as any other credit intermediation fees that the consumer will be responsible for. As a result, whenever you use the services of a credit middleman, you should always check which category it belongs to.
Finally, and perhaps most importantly, no credit intermediary may demand compensation for providing services.
Scams must be avoided at all costs.
At a time when households are expecting some problems as a result of broad price increases in products and services, as well as a predicted rise in interest rates (which will raise the burden on credit), extra caution is required.
There is no shortage of credit fraud stories. The Bank of Portugal has issued several credit fraud warnings in order to alert consumers to the need for caution.
There are several topics that should be investigated with caution in order to prevent being a victim of a scam. Knowing where the dangers are hiding and how to avoid them is critical.
· One of them is to double-check the entity we're contacting, as described above.
· Another red flag is the ease with which money can be borrowed. Be cautious if an entity offers you an almost miraculous remedy.
· Be alert if someone asks you for money during a procedure that was supposed to be about facilities and speed.
Information is your best defense. Search, inquire, learn, and if you have any questions, contact Banco de Portugal.
If you are looking for a credit intermidiary do not hesitate to get in contact with us!