How to find a loan in the 21st Century
I’ve come across many personal finance articles that giving advice on choosing a loan provider. Many of them give sound advice: shop around, go for the lowest interest rates etc.
While the concepts behind these articles are very sound, I can’t help but feel that they haven’t kept pace with technology.
Because here’s the deal: the internet has made information so readily available.
So you shouldn’t need to meet with different bankers and lenders just to find the right deal! Not only does it take a long time, it requires a lot of organizational skills!
How the lending landscape has changed
These days, you can easily visit a lender’s website to get a fair idea of what their rates and terms are. Sure, the rates that you’re seeing might not be exactly tailored to your specific financial situation. But at least you can compile a list of lenders in a single afternoon and weed out those that are obvious no-gos.
But the lending industry has gone one further. Thanks to affiliate relationships between websites and loan providers, numerous comparison and review sites are popping up.
These sites aggregate the typical information in a single place. They often offer tools that allow you to filter and compare loan providers easily. Some even present the information such that its relevant to your financial situation.
Here’s the website of a Loan Advisor that I really like – they have a chat bot on their site.
This nifty thing takes your inputs and presents your options in a familiar “messenger” format. It’s really like getting help from a friend through messenger!
Does that mean that you never have to meet bankers and lenders ever again?
Well, the loan industry has certainly become more high tech. But there’s still a big need for you to meet with your loan providers in person.
It’s necessary because loan officers can “get a feel” of who they’re lending to.
But more importantly, it gives you an opportunity.
You’re able to take advantage of the human-to-human interaction to ask for a lower rate, or more favorable terms.
This isn’t something that you can do through the internet (so far!)
Also, be careful of a comparison site’s motivations
As we mentioned earlier, many comparison sites don’t provide their services for free. They’re often paid an incentive to pass on leads to lenders. While this doesn’t automatically mean that a site is biased, you must keep these relationships at the back of your mind when evaluating the information they’re presenting you.
The best sites tend to disclose their affiliate relationships in a clear part of their website. You can usually find a disclosure page by looking in their navigation menu or their footer.
Here’s my advice:
Comparison sites and the internet is such a powerful tool. You can use it to quickly pare down your options to those that make the most sense for you. But once you have about 10 options narrowed down, do give the loan officer a call to see if you can strike an even better deal. Remember nothing beats the human touch!