Many of us will borrow money at some stage, but it can be tricky knowing which lender to go with. Even if you are sure as to what type of loan you want, you will still have a selection of different borrowers to choose form and this means that you will need to decide which one is going to be the most suitable for you. This can be a tricky decision, especially if you have not used many lenders before so do not really know what to expect from them. There are some steps that you can take though, which will make it easier for you to decide
Decide what you want
It is really important to start by deciding hat it is that you want form your lender. There are all sorts of possibilities that you may wish for from a lender you know to the cheaper, from good customer services, to good reviews. It can actually be a bit tricky knowing exactly what you should be looking out for though. It is therefore wise to start by talking to others about what they look out for in a good lender, particularly people that borrow regularly. Then you will have an idea of what they like and it should allow you to decide whether that is something that you will be interested in as well. You could also ask them about what they consider to be bad and good about the lenders they are using now and have used previously. This will allow you to get a good idea of the sorts of things that you might need to look out for in a lender.
Once you have done this research you will then be in a position to be able to come up with a list of things that you are looking for. It will be useful to prioritise them as well. For example, think about whether you feel you want a lender that is well-known but if they are considerably more expensive, would you be prepared to pay for it.
The cost of a loan is an important factor for all borrowers. Therefore, comparing this is probably the most important thing that you will need to do. With so many lenders it can feel daunting to work out how you will do this. However, there are ways to make it easier and unless you want to, you will not have to look them all up on search engines and then get a quote from each individually. There are other methods:
- Financial advisor – many people choose to use a financial advisor to help them. They will know about loans and who offers what and will be able to make a recommendation. If you use an advisor that is associated with a particular lender then you will find that they will only be able to recommend products by that company. However, an independent financial advisor will look across all lenders so will be much more likely to be able to find a lender that meets your criteria. However, they will charge you an hourly rate for their service. If you are considering a large loan, such as a mortgage, then it can be well worth it as you could save more money than you pay them. However, if you are only borrowing a small amount, it could be better to do this research yourself as you are unlikely to be able to save enough money to cover the cost of the fees.
- Comparison website – a comparison website will enable you to be able to compare a selection of lenders and you will be able to see which might be the cheapest. The main problem with comparison websites is that they do not look at all lenders. Some lenders make a decision not to appear on them and others are not normally picked to appear on them. This could be because the comparison websites make commission out of the lenders that they recommend and if they find that the lenders do not pay them very much for the leads that they generate then they will not choose to list them but pick ones that do pay them more. There are comparison websites that do pick from all lenders and it can be worth investigating who they are so that you can use them.
Compare other factors
Comparison websites only compare on price. If that is the only factor that you are interested in then this could be the perfect way to pick a loan. However, most people will have other criteria as well. A good method is to find the cheapest and then see what they offer and whether you would be happy using them. Compare that with the next cheapest and so on. Then you should be able to identify which lender is likely to offer you the best value for money.