Using a loan comparison website in Australia is an absolute must
With hundreds of financial services providers, and thousands of products amongst them, making use of a loan comparison website is no longer a simple convenience but, a necessity.
With so many lenders and literally thousands of credit and savings products available a loan comparison site is naturally one of the most useful tools for any Australian consumer.
Although a loan comparison website needs no introduction, it is important for us to consider the different types of sites and discuss which ones are more accurate and unbiased when it comes to showing you the cream of the crop in the financial and lending industry.
Why loan comparison helps
Comparing loans before actually applying for one can prevent you from being rejected by multiple lenders and having you credit score fall as a result. It will help you find the best products and the most competitive introductory deals.
It will also help you easily bypass brokers and other middlemen looking to take a share of the pie by directing you straight to the credit provider. Finally you will save time by comparing using one of these sites since you won’t have to manually look and list lenders.
Reasons to use a loan comparison site
- Avoid brokers and go directly to the credit provider
- Avoid scams and unregistered lenders
- Allows you to view the most competitive deals in one place
- Lets you compare the top deals to find the absolute best
- Saves you lots of time since all the work is done for you
- Gives you access to the whole market and not just the better known lenders
- Offers alternative credit products from alternative credit providers like P2P loan providers – not just banks
- Allows you to search for specific features – be it a large loan amount, low comparison rate or low fee
- Gives you the power to find what you’re looking for
- Avoid being denied a loan
What loan comparison websites actually do
You can accurately consider a loan comparison website to be a research collection and distribution firm – collecting information on various credit products and distributing them to consumers.
Although this may seem very straightforward these platforms are very complex and all have their own set of principals, guidelines, inclusions, exclusions and so on.
One of the lesser known facts about these sites is that they also “sell” or distribute, their data to lenders.
This is because these lenders are keen on keeping an eye on the competition and likely save a lot of money by using the loan comparison sites rather than doing the digging manually.
The sites are designed to list a range of products from different lenders in an easy to understand table so consumers can make informed choice and, of course, find lending products that suit them and meet their needs.
Consumers can typically also select a handful of products they like the most and then compare only these – side by side to make the best decision.
Loan comparison is better than using a broker
Even though both loan comparison sites and brokers make money directly from lenders – brokers have a lot more to “win” by offering you loans from lender which offer them the highest commissions.
On the other hand, loan comparison sites risk losing all credibility and even becoming obsolete if they are biased and show no accuracy.
How loan comparison websites make their money
In order for any business or website to operate it needs to generate some form of income and even online businesses like the several loan comparison websites in Australia employ staff – usually experts and highly educated people who need to work from an office.
This means that they also have significant operating expenses and must find a way to make money without directly charging the consumers who use their tables and data to find competitive credit.
So how do they generate money? There is not one single way that any of these sites generate an income but rather, a combination of ways which we’ll briefly look at here.
One of the ways that they make money is, as already mentioned, by charging banks and other credit providers a subscription fee to receive all the relevant data regarding their competitors.
The second way is that they get paid a commission by some or most of the lenders they list and compare if someone gets a loan or a product with them via the site. Sometime a few lenders will pay to be listed on a certain page and a “sponsored lender”. Finally they also sell advertising space on the website.
Looking out for conflict of interest
It would be a serious waste of time for you, as a consumer, to have to research the loan comparison website as well as find, compare and select a personal loan or credit cards.
Why would you need to research the loan comparison sites? Simply because not all sites are created equal and many of them list loans and insurance products that are underwritten by the very holding company that owns them.
This may be a lot to take in but – if 7 out of 10 of the options listed on a website are underwritten or provided by a partner or holding company then you can expect that you haven’t been given the fairest of comparisons.
Many of the sites in Australia disclose who they’ve partnered with and where sponsored links and products will be found. They may also tell you their process and inform you of how they try to avoid conflict of interest and many times it’s worth it to read these.
Finally, as discussed in the beginning of this guide – different sites make money in different ways. The list and content regarding the major loan comparison websites in the country below take many factors into account – including how the site makes money and how much of the market is included.
Important factors that are relevant:
- Who the site partners with
- Who own the site
- How many sponsored links are present
- How the site makes its money
- Whether or not they strive to include whole of market lenders and products
- Number of adverts
What financial products can you compare?
All major loan comparison websites in Australia focus on credit cards, home loans and personal loans. The category of personal loans is sometimes split up into a range of other loan types including quick loans, payday loans, unsecured loans, low doc loans, vehicle loans and homeowner loans.
This means that you can use a loan comparison site to find and compare just about any form of credit available in Australia and it’s actually a must!
One of the most diverse types of credit is credit cards with so many different types and so many different issuers to choose from. In this day and age it has become essential to use a credit cards comparison tool or site in order to find a suitable and affordable or competitive card.