If you are looking into getting a debt consolidation loan, then you will find that you basically have two options. The first is to get a consolidation loan from an independent lender and the second is to get one from your bank instead. So which one is truly better and how do you make a decision based upon which one to use?

Banks or Independent Lenders?

The main places where people go to apply for a consolidation loan are independent companies. There are literally hundreds of independent companies that banks have to compete with and when it comes to interest rates you can clearly see why.

Most banks seem to charge a much higher interest rate than is needed and usually the only reasons why people do choose a loan through their bank, is because they trust them. It doesn’t matter to them that the charges are higher because at the end of the day, they trust that the bank will not let them down. This is not always the case though and whilst getting a consolidation loan with your bank may seem the best option; it sometimes isn’t depending upon what their charges are.

The main advantage of an independent company is that they do offer lower interest charges. This means that you get more for your money and you will not struggle as much with the repayments. However, many people do not trust independent lenders and it is true that there are some out there who are basically loan sharks. They take your money and then they use intimidating ways in which to get that money back from you if you do struggle with payments.

Generally it depends upon your own personal circumstances as to whether you would prefer to deal through your own bank, or whether you would prefer to look for the best deal from an independent lender. There are advantages and disadvantages to both and so it is a good idea to research both options thoroughly.

If you wanted, you could always ask your bank if they can offer a more competitive rate. Sometimes your bank would prefer this as they would still be getting your business, even if it is for a cut down price.

Overall lending from your bank may be a good option if you can get a lower interest rate. However, if not then there are hundreds of independent lenders that you can borrow from.