Comparison websites tend to be viewed as “peoples champions”, and if you’re looking for loans online today, there are loan comparison sites that can help.
But are loan comparison sites worthy of such adulation? Are they really the saviours of the cash strapped masses? Of course, there isn’t a straightforward answer – like most things in life, there are good ones and there are bad ones.
Many loan comparison websites fall short of the mark
A good comparison site should do at least three basic things:
- Provide a wide selection of products representative of the whole market.
- Present products in an unbiased format.
- Supply the right information to enable users to make an informed choice.
Sounds simple doesn’t it? Fundamentals of any comparison site – but many fall short of these basic requirements.
They only feature loan companies who are willing to pay for inclusion
Most comparison sites receive commissions from lenders for the introductions they make. In order to maximise revenue, only paying lenders are featured. This is great for the site operators, but you don’t get to see the full picture – and you could miss out on other lenders in the marketplace who offer better value or are better suited to your circumstances.
They don’t present results in the order that benefits you
When presented with any list of items to compare, we naturally expect to see the most relevant results displayed at the top, and the least relevant at the bottom. This isn’t always the case – companies that pay more commission usually receive a further boost on the page – maybe they’re shown higher up in the results than they would naturally appear, or are highlighted to attract our attention – such a “featured” spot.
They don’t give you the information you need to make an informed choice
If you’re looking for a short-term loan of £250 over 3 months – it’s not enough to show you a list of lenders who can offer a £250 loan with a representative example, You need to see the actual costs of a £250 loan over 3 months charged by each lender, in a simple “apples-for-apples” way. Otherwise, it’s not a comparison – it’s a list! Unfortunately, many comparison sites don’t/can’t offer this functionality due to complexity and time involved in building and maintaining the data.
They don’t take into account your personal circumstances
Ask yourself, how relevant is the list of lenders to you, if the comparison site knows nothing about your circumstances? Each lender uses their own unique criteria to decide whether you are suitable customer material – and it’s not limited to credit scoring.
They consider all types of things, including: age, employment status, occupation, how often you get paid, and much more. You might find some basic details tucked away under a ”more info” link, which you will still have to check yourself, but some requirements aren’t even published, so you won’t find out until you’ve been declined.
Changed your opinion? Alternatives are available
You could use the services of an online loan brokerage service to help find a loan – it’s fast, safe and usually free. Most of the above still applies – brokers work on commissions too (paid by the lender), but there are benefits that you won’t get on a loan comparison site:
- Get access to a largest number of lenders in one place.
- No time-consuming research.
- You get matched with the right lenders for your specific circumstances.
- You’ll only need to enter your details once and your applications are managed for you.
- Get a lending decision in the quickest time – just a few minutes.
- If you’re successfully matched with a lender, there’s no obligation to accept the offer.
If you want to stay in total control, and have a few hours to spare, comparison sites can help with some of the legwork – but for the best deal, you’ll have to use multiple comparison sites.
If you don’t have a great deal of expertise or time, a regulated broker can offer a “done for you” service.
The choice is yours.