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.