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Is it Best to Borrow from High Street Banks?

The high street banks are the ones that we all know. We know their names, we grew up seeing them and know that they have local branches. This familiarity is something which it is hard to escape from. It can give us comfort that we know the name and have seen them around a lot but does this actually mean that if we pick these lenders that we will be better off as a result?

Being well-known is expensive

It is worth starting by considering why a lender is well-known and the impact of that. Many of the lenders on our high street are not only well-known to us. They spend money on advertising and having lots of branches so that everyone knows them. This is because it is easy to think that because we know a name then they are a company to be trusted. Companies therefore spend a lot of money advertising so that their name is well-known. Unfortunately, that advertising has to be paid for and this means that they can often be dearer than less well-known lenders. This is not always the case, but it is worth considering. This is the same reason why branded foods in supermarkets are dearer than supermarket own brands as you are paying for that brand name and the additional costs that the company have that go alongside it.

Having a local branch is convenient

There is no arguing with the fact that having a local branch can be convenient. It means that if you need to speak to someone you can just go along and see them. Of course, some people may actually find it difficult to get to a local branch and speak to someone and may rather phone up or contact them online. This will depend on whether you are often on your local high street and whether the branch is open when you are. Some people prefer to deal online or over the telephone but sometimes it can be quicker to sort things out face to face.

Reputation is not always good

It is tempting to think that because we know a name that means that they are good. We might have heard of a particular lender and think that must mean that they have a good reputation. However, if you cannot recall why you know the name then the opposite could very well be true. It could be that you only know of them because you have read a negative news story about them or you have heard negative things about them in person from someone you know. However, we do not always remember the details so we may know that we have heard of the lender but may not realise why.  It can be wise to ask around friends, family and acquaintances to see what they think of the lender to see whether your initial intuition is correct or whether you have the wrong impression of them. Remember too that the situation could be reversed and you may not like that lender but may not realise why and so trying to find out what they are really like could be really valuable.

Supporting local employer

If the lender has a high street branch then it will be employing local people. It is good for your local economy if you support a local branch like this. This is because those people it employs will hopefully spend their money locally and will help your local businesses and high street shops to flourish. If you use a lender online form a different part of the country or even a different part of the world then there is very little chance that they will be spending their money locally. The growth of local business is important as it means that there will be more local jobs available for you and your family.

So it may seem rather old fashioned to go with a local lender although we would probably be more likely to trust a name that we know. However, it is worth looking beyond the simple assumptions and think hard about your choice of lender. Think about whether you would like to support a local employer and have the convenience of going into a branch should you need to. Also think about where you know the name and whether you can recall anyone saying positive things about them. But also think about the cost that goes into making a name well-known and how much you will have to pay for that. It could be that the loans will be significantly more expensive as a result of that. However, if you do your research and find out that they do have a good reputation then you may be prepared to pay more to use them as a result. There is a lot to think about and you need to decide which factors are important to you so that you can pick according to your personal needs.

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Is the Cheapest Lender the Best?


It can often be tempting to just go with the cheapest lender that we see because it looks like they will be the best. Of course, we do not want to pay more than necessary for anything but it is important to think about value for money when you are taking out a loan just as much as it when you are buying other things. You may not feel it is as important with a loan as it is with something like food, where you want a good taste or with a product that you want to last, but it is worth giving it some thought.

Repayment amount

It is really important to make sure that you will be able to afford the repayments for your loan. If the loan is a quick one it does not necessarily mean that the repayments will be easy for you to afford. This is because it will depend on how many repayments there are. Also, if you just compare the interest rates then you could find that you will have to pay extra in the form of admin charges or other fees which could put your payments up. It is therefore well worth finding out how much those repayments will be. Also check your bank statements to see whether you will be able to afford these repayments. In order to do this you will need to look at what money you usually have left at the end of each month and whether this will be enough to cover those repayments. It might be that you will be able to reduce your spending in some areas in order to afford them. If this is the case then you will need to make a note of what you need to do in order to make sure that you are leaving yourself enough money to cover all of your essentials.  

Repayment frequency / number of repayments

The number of repayments and how often you have to repay will have an effect on how manageable the loan is. It is important to have an understanding of this so that you can consider whether the loan will suit you. Think about the number of repayments and whether you are happy for the loan to last that long. The longer it lasts, the cheaper the repayments will be but as there will be more of them, you will end up paying more for the loan. You will need to consider whether you think that this is worth it or not. You may prefer to have larger repayments and really cut back to manage and get the loan paid off quickly and make it cheaper. However, you may prefer to make smaller payments and have more money left for other things. It could be less stressful for you to not have to worry about how you will manage larger repayments.

Customer service

For some people it is really important to them that the customer service department is good. It can get annoying f we cannot easily get through to customer services and then when we do staff cannot explain things well or are not very polite. Therefore, you might want to check them out first. It can be wise to contact them, using the method you would expect to contact them if you took out a loan and see how quickly and well hey respond to questions you have. It is possible that you might have questions that need answering anyway and this can be a good way to get them answered and see what their customer service is like.

Reputation of lender

Some people would like to go with a lender that has a good reputation. However, it is not always that easy to find out what they are like, particularly if it is a lender that is not very well known. However, there are ways that you can find out more about them. You could start by looking at their own website and finding out things there. You could also look online for reviews to see if anyone has written anything on blogs, websites or message boards about them. It can be better though, to ask people that you know whether they have used them and what they think of them. It can be difficult asking questions like this as you may not be willing to share that you are borrowing money with too many people. However, it can be really useful as people you know are far less likely to have any boas with regards to lenders. Therefore, you will know that what they are saying is right. They are also more likely to have your best interests at heart and therefore will be more helpful.

So, although it may seem like cost should be our biggest priority, there are other things that we should consider as well.

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