There are many different type of lenders and loan products on the market - from mainstream banks who provide personal loans, car loans and home loans and credit card providers like American Express and Diners Club to short term lenders and payday lenders who provide loans online, the options available to customers are increasing in number.
Although this means that there is more competition amongst lenders and therefore a chance to secure better rates and terms it also means that it's harder to compare lenders and separate the good from the average. In addition, with more and more online lenders starting to compete with the larger more traditional providers, accessing these products due to the mass of online lenders poses a challenge for most.
This is where loan comparison websites come in and, although it may be hard to separate the sites that list loans based on where they'll be able to draw the most commission from those that are entirely unbiased - loan comparison websites give customers the opportunity to identify the most reliable lenders on the market and to compare specific loan products to find the ones that suit them best or offer them the lowest rates.
Loan Brokers vs Comparison Sites
It is important to not the difference between a credit broker and a loan comparison site since they are so often confused and misunderstood. A broker acts as a middle man between a selection of lenders and customers and refers customers to these lenders, more often than not for a commission. A broker will gather all of your details and loan requirements and send them out to these lenders and then make you an official loan offer.
You will then be directed to the lender that you have chosen and will have to make a formal application through them. A loan comparison site on the other hand will not collect your loan details and personal information but will allow you to anonymously enter your loan requirements and search through either a limited panel of offers or a whole of market selection.
The Importance of Comparing Loans
While it's common knowledge that comparing loans using a loan comparison site will help you find a lender that offers the lowest possible interest, these handy sites do a lot more than that.
You can actually improve your chances of being approved for a loan when you use a comparison site, particularly if you have bad credit.
This is because you can search for lenders who consider bad credit rather than having to take a chance and applying with a lender that bases heir lending decisions solely on an applicant's credit history or credit score.
In addition, you can find loans that offer the ideal loan terms for your individual budget - for example if you're on a tight budget and would like to repay your loan in smaller and more affordable amounts you can search for a lender that offers longer loan terms for this exact purpose.
Finally, if you need a larger loan sum you can search for a lender that offers big loan amounts or, secured loans. Another factor that you may want to take into account is the lenders average loan processing time and this is particularly important when comparing payday loans and short term loans.
Finding a Reliable Loan Comparison Site
There are a variety of different loan comparison websites available on the internet. While some specialize in a specific type of loan product - for instance home loans or credit cards while others offer a comprehensive range of loan types.
While some may be biased towards lenders who offer them commissions on referred customers others are completely unbiased and list loans and credit providers based on the customers search metrics.
We recommend using both types of comparison sites but perhaps basing your decision using a site that specializes in the specific type of loan that you're looking for. If you're looking for a home loan than using a home loan comparison site will likely offer you the most accurate and most varied results.
Diversity of Loan Types
There are many different types of loans that can be compared using a loan comparison website and this includes home loans, car loans, credit cards, personal loans and short term loans.
When comparing home loans the lenders products are the focus since the particular rates that you will be offered can only be determined once the lender has evaluated your credit and application details. When it comes to personal loans and short term loans you can compare the loans based on what's most important to you.
This can be anything from the interest rate offered on the particular loan to the loan term which could make your repayments smaller and, for those who have bad credit to find lenders that offer bad credit loans. Finally a loan comparison site can also help you find lenders that offer pre-approval which is a great way to ensure that you can get approved for the specific credit that you're looking for without having to worry about being denied and having you credit report adversely affected.
Comparing Credit Cards and Revolving Lines of Credit
Perhaps one of the most popular types of credit products for comparison are credit cards. This is partially because of the massive number of individual credit cards available on the market and partially because of the variations in interest rates, interest-free periods, annual card fees and credit limits available.
What makes choosing a credit card even more difficult is the fact that each card on offer offers their own set of unique rewards, points and cash back offers from airports points to free tickets and unbelievable cash back rewards - it's hard to choose among all the great offers out there.
Using a loan comparison website to compare credit cards means that you can find one with the longest 0% purchase and/or balance transfer period, the lowest interest rate and the most suitable rewards for your preferences and lifestyle but, it also allows you to find a card that you will be most likely to qualify for.
If you apply for a credit card and are refused the credit search performed by the lender will appear on your credit report and too many of these will significantly affect your ability to be approved by other lenders and for other personal loans.