Have you ever seen a great offer on a loan comparison site, only to click through to the lender’s actual site to be disappointed that the offer is not quite what you thought it was? All too often the APR is higher, or the terms are different in some way, or it may be even just the small print on the lender’s site that reveals that what was billed on the comparison site was not the same offer at all! That is why loan comparison sites fail.
There has been quite a lot in the press recently about how loan comparison sites draw people in, only to have those people suckered into an offer which turns out to be quite misleading. People in the UK may be familiar with a well-known online financial site publicly distancing themselves from the entire loan comparison ethos by asking viewers of their TV ad to “Remember, you won’t find our offer on any comparison site”. The level of perceived disappointment has been so great among the public that this well-known advertiser has seen fit to take this action,
Why loan comparison sites fail is not the fault of the sites themselves. Far from it; they genuinely do seek to provide an up-to-date service. The problem is endemic in the procedures of the market itself, especially the financial market, as it twists and turns and tries to adjust to new circumstances.
What started out as a great idea has turned sour. But it isn’t too difficult to see why. In today’s volatile financial markets the detail of loan offers will change minute by minute. It will be difficult for the comparison web sites to change things in time to reflect the new offers on their own web pages.
So while the advertiser sites are not to blame for this, the disappointment of people looking for a good loan is not less palpable for that. The reason why loan comparison sites fail cannot be blamed on those sites, but on the fast-changing market. Nevertheless, ordinary borrowers will feel let down by this. What seemed like a good idea a couple of years ago has turned somewhat sour.
Wouldn’t it be great if we could turn the whole thing round the other way. What if there was a service where you could make the loan application (preferably with one single application form) which then went to a large panel of lenders who would then compete for that business? The loan offers would then come back and it would then be a simple case of selecting the best deal. The element of disappointment would be taken away because the offer would then be binding in law.
Then once the ten day cooling off period started, all legal protection would be with the borrower, rather than the lender. Things would be more open, and a definite offer, not a speculative offer subject to change, would be there waiting for the borrower’s signature. The reason for why loan comparison sites fail would have been completely cut out from the process.