When you are picking a lender it can often be tempting to go with a name that you know. This is why the main high street banks will often be able to charge a higher interest rate than some of the less well-known lenders. People like to go with who they know and may even just stay loyal to one bank of building society that they already use. It can be scary choosing a lender that you have not heard of or that you know very little about but it could mean that you will miss out on a better rate. There are checks that you can do though to find out more about unknown lenders first.
- Ask people you know – asking people that you know to give you information can be really useful. They will have had experiences that you have not and so you have an opportunity to learn form them. If they have had an experience of using a particular lender that you are considering, then you can find out more about their experience and whether they would recommend them to you or not. This is really valuable information as they will have no reason to be biased and if they are someone that cares about you, they will try to give you the best advice to help you. Even if you can only find out about who to avoid, this can be useful as you will know what to look out for in a bad lender.
- Look at online reviews – if you have no one to ask or do not feel comfortable talking about this sort of thing then you will have to find a different source of information. If you dig about online you might fid some information or reviews of the lender. These can be varied and there is no way of knowing if they are impartial or correct unless you can find them on a site that you really trust. It is worth remembering that reviewers might gain from commission on leads if they recommend certain lenders so they may be more inclined to recommend those. Try to find sites that seem impartial and do not have leads and links to lenders sites or ones where you trust the reviewer.
- Check out their website – you can get a lot of information about a lender from looking at their website. You should be able to get a feel for the company and you might be able to find out about how they were set up and things like this. You may also gain by looking them up on websites like Wikipedia which will have information about how they were formed and when as well as information about anything notable that they have done or been involved in.
- Contact them directly – if you have any questions or concerns then contacting the lender directly can be useful. Not only will you be able to get your question answered but you will also be able to find out what their customer service is like. You will get a feel for how polite and friendly they are, how quick they are to answer and how well they answer your query. It can be very enlightening.
As you can see there are a lot more things that you should be concerned with when picking a lender. It is therefore no surprise that many people will just pay more to stick with one that they trust. However, if you do some research, which may not even take that long, you will be able to find out whether you might want to use any of the cheaper lenders that are available. Of course, as well as finding out about them you need to look at their costs more closely. Just comparing on interest rate, unless you use the AER means that you may not be comparing like for like. Some lenders will add on other fees as well, such as administration fees and so the loan could be more expensive than it seems. You will also need to take into account how many repayments there are, as the longer the length of the loan, the more expensive it is likely to be. So, it is wise to calculate the actual cost of the loan so that you can compare the price properly. You might also want to see how high any fees they might charge for things like late repayment are. Although you may not expect to make a late repayment it is still useful knowing how much they charge for this just in case. If one is very much higher than another then you might decide that you do not want to use them, particularly if their main costs are not that much different to other lenders. Also knowing how expensive it could be if you do miss a repayment could help you to be more motivated to make your repayments on time.