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Comparing loan products online – the benefits of informed decisions

Deciding to take out a loan is a big step, and there is a lot to do before people are ready to choose the right product for them. There are so many options out there that it can be extremely confusing, with the financial services industry at times seemingly designed to be alienating and hard to navigate.

Going into a bank to ask for a loan might be the most traditional way to secure extra funds, but in the 21st century, consumers are increasingly turning to the internet to get a loan. By comparing short term loan products online, people can carry out some research to make sure they are getting the best possible interest rate and a deal that is right for their specific needs.
There are a lot of advantages to looking for short-term loans on the internet, with the main benefit being that there are typically more attractive interest rates available online compared to those on offer at traditional high street lenders. This is due to the fact that banks have high overheads with their buildings and staff, meaning they have to make that cash back in fees and higher rates. In contrast, online lenders have much lower overheads, which gives them room to offer better deals.
Using price comparison websites
One of the best ways to find the best interest rates for loans is by using price comparison websites. These empower customers by giving them the power and control to search from all of the different products available on the market to find one that matches their own financial needs and requirements.
A recent decision by a group of independent Competition and Markets Authority (CMA) panel members recommended that all short term lenders must feature on at least one price comparison website. This will have the impact of increasing transparency within the financial services sector and give consumers more opportunity to see what the differences are between the products they are being offered.
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Simon Polito, chair of the CMA’s Short Term Lending Investigation Group, said: “This will promote competition and provide the incentive for new and existing lenders to compete to offer lower cost loans and win borrowers’ business. It will also make it easier for new entrants that offer lower cost loans to access customers.”
Applying for a loan used to be a long, drawn-out and complicated process. It involved filling out many complex and confusing forms and that put a lot of people off. However, the arrival of price comparison websites has made it easier than ever before to compare the best interest rates on short-term loans.
What to look out for
Price comparison websites present information on loans in a way that makes it easy for consumers to see what they are being offered, but there is still a lot of data to sift through. APR rates and balances are two of the most important things to look for when comparing loan products online, with the APR% giving the overall equivalent cost of a debt. As the RAPR% includes any fees the lender is adding to the total package, it can be a better guide of how good a deal is than the interest rate alone.

 

Essentially, one of the most important reasons for comparing loans online is that it gives control and choice to the consumer, empowering them to make the financial decision that is in their best interests. Not only this, comparing short term loans online allows customers to take the time they personally require to make a decision on which loan product or finance is right for their needs. Remember that you should never borrow more than you require, and that taking out a short-term loan is never intended to be a long-term solution to financial problems.