title:Advantages and Disadvantages of Local Lenders author:John Mussi source_url:http://www.articlecity.com/articles/business_and_finance/article_4990.shtml date_saved:2007-07-25 12:30:07 category:business_and_finance article:

When most people are looking for loans or other financial services, they almost immediately turn to the bank or financial institution where they’ve done most of their business in the past. If this isn’t an option, then their next resort is often whichever bank or institution is closest to where they live or work.
While this practice does have convenience on its side, it isn’t always the best choice, especially if you’re in the market for a loan? after all, what’s convenient might not be the best in terms of interest rates or loan terms.
Below you’ll find a listing of some of the advantages of using local lenders, as well as some of the disadvantages that you might encounter by not considering all of your options.
Advantages of Lenders in Your Area
As mentioned above, utilizing banks or finance institutions in your area is an incredibly convenient way of doing business. While this is in itself quite an advantage, other advantages of applying for a loan from a local lender also exist. Local lenders may offer you special rates or discounts as a repeat customer or simply because you live in the area, and there may also be more options for submitting payments available since you live locally as well.
If there is a problem with a payment or any other aspect of your loan, it is also helpful to be able to go in person to clear it up instead of having to do it over the phone or via the internet.
Local Interest Rates
In some areas there may also be local interest rates, which is a general guideline of the rates that banks and lenders in a certain area set their rates at. This can be a mixed blessing, depending upon whether interest rates are on the rise or the fall in other areas? after all, if other banks fall below the local rates then it’s unlikely that the banks in your area will match them before the local rates adjust. If rates in other areas rise, though, local rates may remain lower for at least a little longer.
Of course, local rates generally only apply in smaller communities or larger cities (where there is little competition or a large amount of competition), and will still be dictated by rates that are set nationally.
Limitations of Local Lenders
Local lenders do have their limitations, and they may cost you money in interest if you’re not aware of them. If you only do business with those lenders in your area you may miss out on lower interest rates because local rates haven’t adjusted to one trend or another, or you might find that a national chain that isn’t local to you is in the middle of a special promotion that could have locked you in at a better rate.
You also might miss out on the rates and terms offered by non-traditional lenders that aren’t bound by some of the limitations of your local lenders, such as those offered by online lenders or lenders with low overhead.
Expanding Your Horizons
Before committing to any loan, you should take the time to investigate the rates and terms that are offered by a variety of different lenders? everything from banks and finance companies to online lenders. Request quotes from several of each type, both in your immediate area and out of it.
Compare the rate quotes carefully and determine which is really the best offer? not just which is the most familiar.

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