A credit broker is a financial market participant that is an intermediary between borrowers and banks operations in lending [1, p. 216]. In the process broker is actively cooperating with various financial institutions and companies: evaluation companies, banks, insurance companies, real estate agencies, etc. [2, p. 165].
The appearance of the first brokers was due to the economic development of countries. With the development of the real estate market the role of credit brokers has become more popular.
First credit brokers have appeared in the real estate agencies. The main task of the broker was to help the client in the process of obtaining a loan to purchase the apartment or advice on a mortgage credit. The most widespread brokers are in UK, USA, Canada, Australia, Spain, New Zealand. In the post-soviet countries this type of activity has appeared recently. The growth of mortgage lending has increased the number of mortgage brokers, their competence and professionalism. They tried to diversify its business and began to assist in matters of consumer lending, car loans and loans to legal entities. The basic assistance of credit broker is subject to the requirements of the bank in the collection of documents so that the chances of getting a loan were as high as possible. For example, if the borrower was previously overdue the loan, the broker may offer to collect documents that explain the good reasons for these delays and evidence that currently is not repeated. These can include the receipts for payment of all accounts which confirm the fact of changing the customer relationship to the payments on the loan.
The broker offers some techniques, which allow the client with negative credit history or no income to obtain a bank loan. So, the importance of the broker is that it can contribute to obtain a loan to individuals who acutely need it, but alone can’t get. In this respect, a credit broker can even save the life of a man who was in a difficult situation.
Services of the credit broker are not always cheap, but if the person is not an expert in finance or just has no time to collect documents and choose the financial institutions, it makes sense to apply to such a company. But today is a difficult task to choose a good broker, so when choosing the organization we need to focus on the company’s reputation in the market.
We have carried out the analysis of literary sources, in which two sources define the general concept of the broker, three — the concept of a mortgage broker, and the rest — the credit broker (tab. 1).
Analysis of the definition of the broker
|Author||The name of the source||Definition|
|Wikipedia||Credit broker — financial market participant who acts as an intermediary between banks and borrowers in the implementation of operations of crediting of physical and legal entities.|
|Encyclopedia of banks|
|Credit brokers — a company engaged in mediation between potential borrowers and banks. Credit brokers choose the individuals who wish to obtain any loan product, the best option, and put borrowers for banks with the most appropriate parameters for age, income, place of work, work experience, place of residence, number of dependents, etc. The brokers profit is generated by percent of loan transactions.|
|Vladimir Konoplitsky and Anna Filina||«It’s business» (the explanatory dictionary of economic terms).||Broker — intermediary in trade transactions, establishing contact between the seller and the buyer. Legally, the broker is never a party to the contract, is not an official representative of the seller or buyer. The broker operates on the basis of individual orders strictly within the limits of client’s instructions at every stage of the transaction. Can control the execution of the transaction, to study the market, etc.|
|A. I. Bazyleva||Dictionary of modern economic terms||Broker — an individual or firm engaged in the brokering of transactions in stock, commodity and currency exchanges. Brokers make deals, usually on behalf and at the expense of customers, and can also act on own behalf, but at the expense of the principals.|
|The website «Your broker» (tvoibroker.ru)||A credit broker is a financial intermediary. His work is called credit brokerage. Task of the credit broker is to provide the client of a loan or conclusion of other financial transactions in the most favorable and comfortable conditions for the client. A credit broker performs search and selection of optimal conditions of lending for the future borrower, the bank or other financial institution, provides assistance in the formation of package of documents for credit committee, legal and financial advice to the client.|
|https://banks.is||The article «Fraud with credits»||A credit broker is the intermediary between the bank and the client, which, having sufficient financial literacy, on a reimbursable basis helps a person to choose the most favorable credit conditions, to collect documents for a loan, fill out an application to the bank.|
|http://the banks.info||Credit broker provides assistance in obtaining a loan. What it is: 1) client consultation, recommendations on the selection of credit programs; 2) analysis (so-called underwriting) situation of the client, analysis of his credit history, the selection of those credit offers that are available to him in this situation and help in its correction; 3) the collection and package of documents for submission to the bank; 4) search for the best deals for «good» borrowers, looking for possible offers for customers with damaged financial reputation.|
|Financial and investment dictionary||Mortgage broker — one who for a commission locates the mortgage loans on behalf of creditors, but he is not involved either in the formation or maintenance of credit.|
|Encyclopedia of banking and finance||Mortgage broker — an intermediary between the borrower under the mortgage and the lender. The broker does not provide credits at the expense of own means and do not render significant services in their service.|
|Financial dictionary. The Association of Russian banks.||Mortgage broker — the intermediary between mortgage Bank and a mortgage borrower who:- helps to select the most appropriate program;- helps to create the necessary documents; it is advantageous to represent the client to the bank and increase the chances to get a loan with the best conditions;- helps the client to go through the underwriting procedure with the best result;- fully protects the interests of the customer — from choosing a bank to the signing of the loan agreement;- helping to find exactly the apartment that will satisfy both the customer and the bank.|
|Alexandrova L. S.||The role of credit brokerage in the financial literacy of the population||Credit broker — specialist in management of personal finances. His main tasks are the analysis of the unique personal financial situation and goals of the client, providing recommendations for corrective actions to achieve financial goals, improve its financial condition and diagnose financial problems and search the ways of their solution.|
Comparative analysis of these sources showed that the presented definition is almost completely similar to each other, and only one definition from the website «the banks.info» has a difference in specification of the tasks of a credit broker such as client consultation, analysis of client’s situation (the so-called underwriting), the analysis of his credit history, the collection and package of documents for submission to the bank, search for the best deals for «good» borrowers, looking for possible offers for customers with damaged financial reputation [3, p. 130], [4, p. 47]. On the basis of the analysis we will present the revised definition of credit broker.
A credit broker is a person or firm that provides consulting and intermediary services to clients, consisting in the selection of the best loan programs and analysis (underwriting) of the client’s situation, analysis of his credit history, choosing those credit offers that are available to him in this situation and help in its correction, the picking and assembling of documents for submission to the bank. The main task of the credit broker is a competent and quality care to client in obtaining any loan product.
Credit brokerage is mediation, which provides assistance of professional consultants in obtaining a loan. The first services of credit brokerage appeared in 2005. The founders of the lines are considered to be insurance brokers, who actively promoted insurance policies program, insurance, and also engaged in the insurance of loans. Due to the expansion of car lending has expanded the scope of mortgage and consumer classic loans.
We also have conducted a review of the literature, in which four sources define the general concept of brokerage and three — the concept of credit brokerage (tab. 2).
Analysis of the definition of credit brokerage
|Author||The name of the source||Definition|
|Wikipedia||Credit brokerage — brokering of credit broker, whose ultimate goal is to provide the client of a loan or conclusion of other financial transactions in the most favorable and comfortable conditions for the client. This activity also lies in finding and selecting the best possible loan terms for the future borrower, banks or other financial institutions, providing assistance in the formation of package of documents for credit committee, legal and financial advice of client|
|Voitkevich N.I., Makarov V. O.||Economic essence and basic categories of credit brokerage||Credit brokerage is a type of mediatory and advisory activities of organizations/individual entrepreneurs (credit brokers) in the market of banking services designed to meet the needs of potential borrowers in obtaining loans on conditions close to the optimum.|
|B. A. Raizberg, etc.||The dictionary of modern Economics||Brokerage — the remuneration received by the broker. Set as a percentage of the transaction value or a fixed amount per transaction|
|The website «Your broker» (tvoibroker.ru)||In Russia the term «brokerage» has two meanings.1) From the English. Brokerage — broker’s fee for transactions. Brokerage is set as a percentage of the transaction amount or as a fixed amount for a certain amount of sold (purchased) products2) Also, the term «brokerage» is called mediation for the selection of suppliers of goods and services best suited to customer requests, often with additional bonuses from the broker. As in any mediation, the broker’s profit is a commission.|
|The role of credit brokerage in the financial literacy of the population||Brokerage performs a specific function. First, this advisory function, which consists in the selection of optimal conditions of lending, insurance or investment, choosing a bank or insurance company, to provide assistance in the formation documents. Secondly, it is outreach, which consisted in providing and clarifying information about the new services provided by banks and insurance companies.|
|exam-ans.ru||The development of credit and insurance brokerage||Brokerage is a type of financial advisory when, in addition to counseling, we have assistance in the formation of the necessary documents and negotiations with financial institutions on the provision of appropriate financial services. Brokerage is a complex business, requiring from its members specialized knowledge and experience.|
|exam-ans.ru||The development of credit and insurance brokerage||Credit brokerage — mediation activities of the credit broker, in the process of which the search and selection of optimal conditions of lending for the future borrower in accordance with its needs, the choice of bank or other financial institutions, aid in the formation of package of documents for submission to the bank, prior approval of the lending opportunities, recommendations for improving the status of the borrower, reduction of the term of consideration of the application, reducing the risk of failure for a loan, the filing of an application to the bank, support for handling documents of the borrower in the bank, legal and financial consultation, including a detailed calculation of all related costs, a comparative analysis of schemes of repayment of the loan, an explanation of features of crediting of the customer with the bank. The ultimate goal of this type of mediation is the reception by client of a loan or conclusion of other financial transactions in the most favorable and comfortable conditions for the client.|
Comparative analysis of sources showed that all the definitions have the same essence, with the exception of two sources — the Modern economic vocabulary of
- A. Raizberg and website «Your broker». In these sources brokerage is determined as the broker’s fee for the transactions, set as a percentage of the transaction value or a fixed amount per transaction. Based on the analysis of the presented definitions it is possible to clarify the refined definition of credit brokerage.
Credit brokerage is a consulting and brokering of mortgage broker, whose main objective is to provide the client on a reimbursable basis any of the loan product as a result of selection of the best credit programs, an analysis of the situation of a client (underwriting), analysis of his credit history, the selection of those credit offers that are available to him in this situation and help in its correction, collection and packaging of documents for submission to the bank.
Библиографический список1. Zernova L. E., Ilyina S. I. Problems of development of Bank’s system of Russia at the present stage. Collection of articles of International scientific-practical conference "Innovative development of modern science." 2014. - pp. 215 - 217.
2. Zernova L. E., Ilyina S. I., Improvement of lending policy of commercial bank. Collection of articles of International scientific-practical conference "Innovative economic reforms in the conditions of risk and uncertainty". 2015. - pp. 164-168.
3. Zernova L. E., Ilyina S. I. Features of application of fundamental and technical analysis on the securities market. Materials of V international scientific-practical conference "Problems of economics, organization and management in Russia and the world". 2014. - pp. 129-131.
4. Zernova L. E., Ryabukhina V. A. Methodical approach to formation of strategy of development of the credit business structure. Collection of articles of International scientific-practical conference "The synthesis of science and society in addressing global problems". 2016. - pp. 46-48.