Advantages and Disadvantages of Local Lenders
When most people are looking for loans or other financial
services, they almost immediately turn to the bank or financial
institution where they've done most of their business in the
past. If this isn't an option, then their next resort is often
whichever bank or institution is closest to where they live or
work.
While this practice does have convenience on its side, it isn't
always the best choice, especially if you're in the market for a
loan... after all, what's convenient might not be the best in
terms of interest rates or loan terms.
Below you'll find a listing of some of the advantages of using
local lenders, as well as some of the disadvantages that you
might encounter by not considering all of your options.
Advantages of Lenders in Your Area
As mentioned above, utilizing banks or finance institutions in
your area is an incredibly convenient way of doing business.
While this is in itself quite an advantage, other advantages of
applying for a loan from a local lender also exist. Local
lenders may offer you special rates or discounts as a repeat
customer or simply because you live in the area, and there may
also be more options for submitting payments available since you
live locally as well.
If there is a problem with a payment or any other aspect of your
loan, it is also helpful to be able to go in person to clear it
up instead of having to do it over the phone or via the
internet.
Local Interest Rates
In some areas there may also be local interest rates, which is a
general guideline of the rates that banks and lenders in a
certain area set their rates at. This can be a mixed blessing,
depending upon whether interest rates are on the rise or the
fall in other areas... after all, if other banks fall below the
local rates then it's unlikely that the banks in your area will
match them before the local rates adjust. If rates in other
areas rise, though, local rates may remain lower for at least a
little longer.
Of course, local rates generally only apply in smaller
communities or larger cities (where there is little competition
or a large amount of competition), and will still be dictated by
rates that are set nationally.
Limitations of Local Lenders
Local lenders do have their limitations, and they may cost you
money in interest if you're not aware of them. If you only do
business with those lenders in your area you may miss out on
lower interest rates because local rates haven't adjusted to one
trend or another, or you might find that a national chain that
isn't local to you is in the middle of a special promotion that
could have locked you in at a better rate.
You also might miss out on the rates and terms offered by
non-traditional lenders that aren't bound by some of the
limitations of your local lenders, such as those offered by
online lenders or lenders with low overhead.
Expanding Your Horizons
Before committing to any loan, you should take the time to
investigate the rates and terms that are offered by a variety of
different lenders... everything from banks and finance companies
to online lenders. Request quotes from several of each type,
both in your immediate area and out of it.
Compare the rate quotes carefully and determine which is really
the best offer... not just which is the most familiar.
You may freely reprint this article provided the following
author's biography (including the live URL link) remains intact: