Finance Comparison Sites: How They Really Work
If you’re looking for finance, you might be tempted to look at comparison sites. If you do, it’s important to understand how these sites work. They’re a business and they need to generate revenue. They don’t exist to provide you with free information.
Comparison sites are like a marketing hub for Lenders, a place for them to advertise. Pretty much every time you click on a link to a finance product, the lender pays the comparison site somewhere between $8 to $20. That’s how Comparison sites make their revenue.
Finance comparison sites are essentially marketing sites. They are lead generators for lenders. Once you click on a lender’s link, the Comparison site gets paid and you’re now dealing directly with the Lender.
The Problem with Headline Interest Rates
Lenders also usually advertise a low ‘headline rate’ on comparison sites. This is usually the best interest rate that the Lender offers for that product. But eligibility for the best rate is usually very limited, and most customers will pay a lot more than the advertised rate.
For example, on a Comparison Site you may see a headline rate for Car Loans of 3.90% for a particular Lender, so you click on the product. But you will only be eligible for that 3.90% interest rate if:
-The car is for business use, AND
-The car is new, AND
-You are a property owner, AND
-your credit score is over 400.
If you DON’T satisfy ALL those criteria, your interest rate with that same lender might be 8%, even 12%. Based on your unique profile, there may be other lenders with higher headline rates that actually work out cheaper for you.
That’s why Comparison Sites are of limited value. You’re better off speaking with a broker who can assess your borrower profile then compare the interest rates and eligibility criteria for a number of lenders.
The Benefits of using a Finance Broker
The alternative to using a finance comparison site is using the services of a broker. Here are 8 benefits of doing that.
1. They match you with the right lender
Did you know that a rejected loan application negatively affects your credit rating? That can make it harder for you to get a loan in the future. Brokers will help you avoid that. They'll take the time to understand your situation, and how you stack up against each lender’s eligibility criteria. They'll then match you with a lender that is more likely to approve your loan application at a great interest rate.
2. They work FOR you
Brokers try and find you the best finance deal. If they can’t do that for their clients, they’ll go out of business. It’s in their interest to look after you, not the lender. But if you deal directly with a lender, they’re looking to get the best deal for themselves, not for you.
3. They provide you with more choice
Brokers have access to the loan products of many lenders. They can help you to choose the best option for your needs. But once you’re put in contact with a lender via a finance comparison site, you only have access to their products.
4. They help you with your application to improve your chances of a quick approval
Brokers know the criteria that different lenders use in assessing loan applications. They’ll help you prepare your loan application to give you the best chance of a quick approval.
5. They can save you money
Lenders usually offer a range of terms, conditions and features with their loans. A broker can let you know the best option/s to suit your needs. They’ll also make sure you’re not paying any extra fees for any loan features that you don’t need. And they’ll make sure you get the ones that you do need.
6. They can help with refinancing if circumstances change
Mortgage brokers can help you to switch lenders if necessary. For example, to get a better deal if your circumstances or market conditions change. They can take care of all the paperwork.
If you’d like to speak with an experienced broker from AutoCarLoans, just Contact Us or call 1300 301 051 during business hours.
DISCLAIMER : The thoughts and opinions conveyed on this website are those of the authors only and are of a general nature. This does not constitute financial or general advice to you from Auto Loans Group. You should seek your own independent advice from a professional which is specific to your circumstances before considering any of the items referred to in this article, including finance, insurance, and car buying.