Whether you use comparison sites or do you own manual research, you’re probably aware of the benefits of using comparison tools before making a purchase or submitting an application. When it comes to applying for credit, comparison sites can be vital in securing you a cost-efficient loan or line of credit that suits your cashflow needs. Whether it’s a short term loan to help you manage an urgent unexpected cost, or a credit line to help you spread the financial impact of a planned expense, loan comparison sites can help.
Loan comparison websites work by listing the lenders they work with depending on the search enquiry you’ve entered. In some cases, it’s a very straightforward process as you only need to enter the amount you’re looking to borrow and how long you want to borrow for. In other cases, you may need to provide more information about what type of credit you’re interested in, or even some details about you.
The website’s algorithm is programmed to automatically provide you with the search results that match your enquiry, and the results should be ranked by price from cheapest to most expensive, though on some sites you can change how the results are sorted. You need to make sure the first results are in fact the cheapest, as some lenders pay comparison sites to highlight their listing. It should clearly state that it’s a sponsored lender if that’s the case!
You should also check if the comparison site runs any soft or hard credit searches prior to filling out any personal information, especially if you’re only looking to get an idea of the credit available. A soft search will be recorded on your credit file but you’re the only one who will be able to see it; a hard search is a record on your credit file that other lenders can see.
Many loan comparison sites tend to charge the lender, so the service is free for the customer.
A broker arranges the transaction between a lender and a customer, so all loan comparison sites are brokers. They match up their registered lenders with customers looking for a credit service. Often, there is no further interaction from the broker or comparison site once you’ve chosen a lender to borrow with, but in some cases the broker can act as a third party intermediary, like with peer to peer loans.
Clear and Fair compares payday loans and instalment loans. Although high cost short term credit has a daily interest rate cap meaning lenders can’t charge more than 0.8% per day, not all lenders charge at this maximum rate and different loan terms and amounts can make some lenders preferable over others. This is why it’s important to compare payday lenders using loan comparison sites.
As well as payday loans direct lenders of all types of credit often list on loan comparison sites. While it can be quicker to apply directly, you should still compare credit options first, so you know you’re getting the best deal. Most comparison sites only compare one type of credit within one search enquiry, but they will compare multiple lenders that offer that service – and even the different products offered by the same lender. For example, a bank may offer three different types of credit card, such as purchase card, balance transfer card and a purchase and balance transfer card. The comparison site may compare all three so you can work out which card from that lender would be the most suitable.
As well as comparing loans, comparison sites tend to have a wealth of information available about the different types of credit they compare, financial tips like ways to save so you can learn to manage your money more efficiently, and even ways to get help if you’re struggling with your finances. You may also find some information about the lenders they compare so you can find out a bit more about your options before choosing a lender to apply with.
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