How to Pick Between Lenders

Image courtesy of Mathias Klang
Image courtesy of Mathias Klang

If you are borrowing money then you will have a lot of options with regards to how to do this. It is important though, to make sure that you choose the right lender so that you are happy with them. You may have different ideas as to what might make a good lender. However, below are some possible characteristics in a lender that you may be looking for and why they are important.

Interest Rates
The interest rates is possibly the thing that most people look at when they are comparing lenders. It is an important thing to consider but you should be aware of a few things as well. Check to see whether the interest rate is fixed or variable. If it is variable and rates go up then your repayments will increase. If it is fixed, this may be just be for a short term, so check that out as well. Also look at how their standard variable rate compares with other lenders as this may be what your rate changes to when the fixed period ends.

Fees
All lenders will have fees. There may be administration fees for opening the account but there will also be other fees as well. You will find that you will get charged if you miss a repayment, for example. Have a look closely at the loan details and look at all of the other possible fees as well. If you think that it is likely to be a fee that you will have to pay at some point then see whether it is competitive with other lenders.

Brand
You may want to make sure that your lender is a well-known company. There are financial institutions that are smaller and may not advertise widely so you have not heard of them. For some people this will matter and they would rather use a well-known name. However, this could be more expensive as the larger companies get more business just off the back of being well known as well as the fact that they tend to pay out more in advertising.

Customer Service
You may feel that the way your lender treats their customers is really important. It may be that you want a nearby branch to visit and approach if you have any queries. You may like someone on the end of the phone 24 hours to be able to discuss anything you want. You may like to deal with your lender by email. Whichever you prefer, you will need to make sure that the lender has that facility and that you are happy with it. Try using the customer services and communicating with someone using your preferred method to see whether you are happy with the results.

Flexibility
You may prefer a lender that can be flexible. This means that they will be able to adjust the terms of the loan if necessary. Perhaps you may want to be able to skip a payment or pay less if you need to. You may want to overpay or pay the loan off early. If you think you will need this, then make sure that it is possible before you take out the loan.

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Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process http://www.turnonepoundintoonemillion.com and sells her books through http://www.bowbridgepublishing.com.

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