Over the last few years there has been a changed in both the personal lending and home loan lending space in Australia. More and more providers are moving to an online service in an effort to process more volume at reduce costs, due rising costs particularly in the area of compliance. However, a lot of these providers offer a comparison service, so consumers can benefit from this emerging technology as well by finding the best rate of by finding a product that’s features and benefits are well suited to them. The problem is that most consumers don’t take up this option that’s usually free!

Loans are moving online

Take for example your home loan. Buying a house is one of the biggest life decisions you will make. Traditionally, Australian’s have trusted the bank they historically bank with assuming that they will look after them with a good rate. If nothing else, the Royal Commission into the banking sector has highlighted that the bank you have banked with for 20 years might not necessarily be doing the right thing by you. Don’t believe me? You might be surprised that if you go to your bank and let them know that you are moving home loan providers unless they will offer you a better rate, in many cases you might get as much as 0.7% off the rate you are currently playing simply be asking. If they were really looking after you, shouldn’t they have offered the best rate they could upfront as you have been a loyal customer. The emergence of online loan comparison sites has reduced traditional banks abilities to gauge out margin. However, the issue is that many consumers are complacent and don’t shop around. Banks rely on this compliancy when setting their rates. You should review your home loan terms and conditions with the market every few years.

There are sites where you can apply for a home loan online as well and never need to meet anyone in person, they can also provide pre-approvals for finance as well. If you are one who likes to take control of their own finances then online providers might be your cup of tea. Having said that, the majority of online providers also have a mortgage broking service, where you can have an expert ask answer all your questions as well.

Similarly, in the online loans space for personal loans there is a lot of competition. By searching around you can significantly reduce the rate that you are paying especially if you have a clean credit history or are willing to put up a car as security. However, be careful because the more inquiries you make the more your credit file will be checked which actually reduces your credit score with the major credit scoring companies such as Dunn and Bradstreet and Equifax. Each credit inquiry you make, they view as a sign that you are in some financial distress and reduce your credit rating accordingly. So be sure to ask when you apply if the company will be doing a credit check.

If you are in the market for a loan, then look past the bank you have had a relationship with and see if you can find a better deal. If you are loyal to your bank and prefer to take out a product with them, then go back to them with the best offer that you found elsewhere and see if they can match it. The financial service space is very competitive now and often they will compare for your business.


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