Navigating the Online Loan Market


The online loan market has intensified over the past 5 years, but many people still only contact their own bank when considering taking out a loan.

But is it really the smartest thing to do?

Your own bank isn’t always the cheapest
There is absolutely no guarantee that your own bank is offering you the cheapest loan.

A bank, like any other business, is always looking to make the most profit, so even if your own bank knows your economy well, that doesn’t mean they are giving you the best deal.

Combined with the emergence of many new online banks last year, competition in the lending market has allowed these banks to challenge more traditional banks.

So even if you ask for the same amount at different banks, the price can be very different.

Therefore, you should choose to use an online comparison service like LendMe, if you plan to apply for a loan or refinance your existing one.

Collect more offers to get the best price
When the price for the same loan amount can vary widely, the best way to find the best price is to collect offers from different banks.

It seems like a huge task if you have to contact each bank and go through their own application process.

However, there is the solution of using an online loan comparison service, which makes this process very easy.

The largest in Denmark is LendMe, where you can get offers from up to 15 banks with just one application.

They can save you a lot of time, as it only takes a few minutes to complete the application, and the banks on their platform usually respond within a few hours.

How to compare offers
When you receive your loan offers, there are three expenses you need to consider. These are the interest rate, start-up costs and administrative costs.

When looking for the lowest interest rate, you should only compare it to other offers that you personally receive.

It sounds obvious, but the bank makes you an offer based on how they value your economy, so you can’t compare it to an interest rate that a family member or friend got.

On top of that, there are the establishment fees which can either be a fixed amount regardless of the amount or vary between 1 and 3 percent of your desired loan amount.

Finally, there is the administrative fee which is usually between 0 and 40 DKK each month. It may not seem like much, but over the life of the loan it can make a difference.

All of these expenses are covered by the annual percentage rate of charge (APR) of the loan, which is a great way to compare your offers to find the cheapest one.

However, the APR only makes sense if you are comparing loans with the same maturity.

LendMe makes it easy to compare different expenses, so you end up with the cheapest loan.

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