What Is a Wholesale Loan?
Wholesale loans are loans made by banks through their third-party lending partners such as brokers and mortgage bankers. There are advantages and disadvantages to wholesale loans.
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Wholesale vs. Retail
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A retail loan is one made by an employee of a bank through which the loan application is made. For example, you can obtain a retail loan from Citibank by walking into any retail Citibank and submitting an application with a loan officer.
A wholesale loan is a loan made through a bank's lending partners. These are usually mortgage brokers or mortgage bankers who run companies independent of the banks, though they offer the loan services of many banks.
The Ability To Shop Around
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Wholesale loans through mortgage brokers offer a distinct advantage over retail loans. Since they are independent from any banks, mortgage brokers or bankers can offer loan products from many different banks. When you use the services of a mortgage broker or banker, they can bring you multiple offers and you can choose the one that best fits your needs.
When you walk into a retail branch, your loan options are limited only to what that specific bank has to offer, which might not fit your needs.
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Independent Advice
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Mortgage brokers and bankers who offer wholesale loans can offer you independent advice about the loan programs of many banks. Since they are not affiliated with any one bank, you can speak frankly with these third parties and not worry about whether they have your best interest at heart.
Wholesale Loans Are Offered at a Discount
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Large broker and banker firms that do high volumes of business will receive discounts on rates and fees from banks that are not offered at their own retail levels. This means, for example, that you can get a better deal on a Wells Fargo loan through a broker than on the same loan product obtained directly from a Wells Fargo retail branch.
Paperwork Is a Snap
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Mortgage bankers and brokers who offer wholesale loans will often complete the bank's paperwork for you. This means that you rarely need to fill out lengthy applications. You simply provide the required documentation and the broker does the rest of the work.
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