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If you’re looking for a new loan or mortgage, or thinking of changing insurance providers, or maybe getting a new credit card, you’ve probably considered using a price comparison site, like Lending Tree, Quicken Loans, or Credit Karma.
Why wouldn’t you? They make it very easy to see what’s available, compare interest rates, and see what you might qualify for. They help you to save money too because you can instantly see the lowest price or interest rate for the financial product you want. There are, however, a few drawbacks as well as some advantages to using these sites.
Pros
Convenience
As we’ve already mentioned, these sites make it quick and easy to search for the financial product you want. You can fill in a form with your criteria and the site will bring up a wide range of options to choose from. Few customers have the time to manually search the web, going to each company and looking at everything they have on offer. Comparison sites save us time and make finding a suitable loan, credit card, or insurance policy a much easier task.
Cost
Most people use comparison sites to find the company that can give them what they want at the lowest cost. That’s why these sites are often referred to as price comparison sites. Most of us will use them to find the cheapest policy, the lowest interest rate on a loan, or the lowest annual fee if looking for a credit card. What’s more, the sites cost nothing to use. At least not for us. The companies that use them pay, one way or another, often via commissions to the site or advertising fees.
Choice
Comparison sites will generally bring up a wide choice of lenders or providers, some of which we’d have overlooked if simply browsing around online looking for deals. Depending on your needs, a smaller, less well-known provider that you might not have otherwise considered might be suitable for what you want right now. Just be sure to check that they really are a reliable firm with good customer reviews and the right regulations in place, before taking the plunge.
Cons
Hidden Conditions
The very nature of a comparison site means we tend to be drawn towards what looks like the best offer on the surface: the cheapest policy, the smallest fee, or the lowest interest rate. But what if that policy doesn’t cover everything we need it to? Or that fee doesn’t include the features we expect it to? Or that interest rate only applies if we clear the loan in the next year? Comparison sites can be a good starting point, but you’ll still want to check that any particular product meets your needs before you commit.
Potential Disappointment
When you search on a comparison site, the system will show you everything that might be a good fit for you, but it won’t have every piece of information needed to present you with the right options. You’re not pre-approved for the loans or cards it’s suggesting and not guaranteed to get them if you apply. Conversely, it’s possible you might get better deals than the site offers you, based on circumstances it doesn’t ask about, if you were to actually speak to the lenders direct.
Lack of Choice
Yes, I know we said ‘choice’ is one of the pros of these sites, because they search so many options for you. However, not every seller or lender is on them, so you could potentially miss out on deals if you only use a comparison site and don’t do any research of your own. You may find, for example, that your own bank can do you a good deal on a loan, because they know you and your financial history, but they may not show up on a comparison site, as they wouldn’t generally advertise the exact deal they’d offer you as a current customer.
Ultimately, you might want to use comparison sites as a starting point, then check that the product they suggest really fits with your needs, then check if any bank or financial provider you already use can top their offer. And remember to take a good look at offers other than your first choice, just in case you’re not approved for that one.
Karen Banes is a freelance writer specializing in entrepreneurship, parenting and lifestyle. She writes articles, website content, ebooks and the occasional award winning short story. Her work has appeared in a range of publications both online and off, including The Washington Post, Life Info Magazine, Transitions Abroad, Brave New Traveler, Natural Parenting Group, and Copia Magazine. Learn More About Karen
To make Wealthtender free for readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a conflict of interest when we favor their promotion over others. Read our editorial policy and terms of service to learn more. Wealthtender is not a client of these financial services providers.
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