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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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