Choosing a lender for a car loan or personal loan can be a daunting task. Cut through the confusion and find out how to choose a lender that will be the best for you.

It’s incredibly common to borrow money throughout your lifetime. When you need a loan for a car, a trip, or to consolidate your debts, it is important to know how to choose a lender. Taking on a loan is a large financial commitment, so it pays to ensure that you conduct your due diligence and work with a lender who suits your needs and situation.

There is a vast array of lenders in Australia, from non-bank lenders, credit unions and building societies to traditional financial institutions such as the big banks.

With this in mind, let’s break it down so you find it easier to choose wisely.

How to choose a lender in Australia

Consider reputation and reliability

First of all, you should always borrow money from a reputable and reliable organisation. When researching different lenders, look into their reputation and reviews. The easiest way is to investigate independent reviews. Make sure you read all reviews, the good and the bad. Look closely at the moderate reviews; these will often give you a spread of the good and bad points.

Websites like productreview.com.au and trustpilot.com are all great places to start your research.

Take a look at the lender’s website as well. They should have one that looks professional and has relevant information, such as an Australian business number (ABN) and an Australian Credit Licence number (ACL) if they do consumer loans. 

Product offering

Different lenders typically have similar (but not exactly the same) product offerings. Some lenders, like Finance One, specialise in particular loan types or products. For example, you may have lenders specialising in vehicle finance, so if you were searching for a car loan, they might be a reliable choice. On the other hand, if you have poor credit and need to access personal finance, Finance One may be best suited, as we specialise in borrowers with a poor credit history or inconsistent income history.

Interest rates and repayments

Interest rates and repayments are two significant factors when choosing a lender.

You may be looking for the lowest interest rates, fees, or reasonable and flexible repayment terms. However, these factors are not the be-all and end-all. There are also good reasons to choose a lender whose interest rates may not be the lowest. Perhaps they are the lender you are already working with, and refinancing through them is more convenient.

Regarding interest rates or repayment terms, deals that seem too good to be true often are. If a lender’s deals are far cheaper than the competition, this could be a red flag. For example, there may be no option to pay your loan out early (or without a fee), or the initial low rate may be unreasonably high after a brief honeymoon period. Do your research, and only take on a loan after reading and understanding the contract thoroughly.

Customer support

Another factor that makes deciding how to choose a lender more simple is customer support. Paying just that bit extra on interest rates can be well and truly worth it for a lender that will pick up the phone and talk to you when you need them.

Anyone who has spent time trying to get through to an unhelpful lender will swear that this can be a real deal-breaker. A suitable lender will work with you, be helpful and compassionate when you call, and not rush you off the line. The best lenders will have a support team who will work with you to find a loan that meets your needs.

Early repayment options

If you have found several lenders that tick all the boxes above, the next factor is whether they have an early payout option. Being able to pay off your loan sooner than the contracted loan end date can potentially save you hundreds (if not thousands) of dollars in interest! The more interest you pay, the more you are paying above the initial sum advanced. However, some lenders don’t offer the option to repay your loan early (or make additional repayments on your loan). In this instance, borrowers may be penalised with early repayment fees or an interest rate adjustment for repaying the loan earlier.

Flexibility

Finally, the last thing to look for when selecting a loan lender in Australia is how flexible they are!

An ideal lender is often flexible in terms of repayments, interest rates and can customise your loan depending on your circumstances. This may make life much easier, especially if you know you are unlikely to meet most lenders’ one-size-fits-all criteria.

Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.

Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528

Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent advice regarding your legal, financial, taxation or other needs, to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. All loan applications are subject to normal lending criteria. Fees and charges payable. Terms and conditions apply.