The Loans Canada team sits down with Gary Schwartz of the Canadian Lenders Association to talk about open banking.
Should You Trust Online Reviews For Lenders?
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People typically use online reviews to see what other people think of a product or service, especially when it comes to a decision that can set them back thousands of dollars.
Online reviews have become increasingly common in every industry, including the lending industry. Not only do these reviews have the power to influence what a consumer decides, but they can also serve to reinforce a company’s credibility. If a company has a lot of positive reviews, people tend to trust that company more and are more willing to engage with them. But do reviews serve as a hallmark of consumer trust in the lending industry as much as they do for other industries?
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Are Online Reviews For Lenders Legitimate?
When it comes to online reviews, there are two sides to the coin. There’s both good and bad.
One of the good things about reviews is that they provide an opportunity for businesses and customers to build a relationship with one another. If you’re having trouble with a lender, an online review is a public forum where you can get your lender’s attention and hopefully have your issue sorted out. After all, no lender wants a bad review, or else fewer people will use their services. Many lenders will reply to negative reviews to show other customers that even though you’ve had an issue, they are willing to put in the effort to fix it.
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Online reviews are also a good way to check a lender’s reputation. Studies show that people are more likely to leave a review after a negative experience than after a positive one, so if there are many positive reviews, that might be a good indication that many people are actually satisfied with the service the lender provided. As a borrower, you’ll be able to see the good things that the lender’s customers had to say about the lender, and also the bad things – like hidden fees, high-interest rates, and bad customer service. Also, because online reviews are public, you will be able to see how the lender handled any negative reviews if they responded to the reviews.
Ultimately, online reviews are a great way for borrowers to see if a lender is reputable and if they should borrow from them or not.
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On the other hand, not all reviews are a true representation of a company. While online reviews are certainly useful for gauging a company’s reputation, there are only tools to help you to do so. Online reviews should always be taken with a grain of salt, especially if there are a low number of reviews. This could mean that a lender is new or has rebranded itself to get away from bad reviews it had in the past.
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Also, be aware that not all reviews are real. There are services online where companies can pay people to leave good reviews. Fake reviews are a problem for most businesses, but especially lenders. Reputable lenders are forced to compete with lenders that only appear reputable because they have all five-star ratings. Eventually, someone will have an issue with a lender and will rate them with less than five stars. So if you see a lender with nothing but five-star reviews, it’s a big red flag. Be especially wary of reviews on a lender’s website, because they can control the reviews you see. Try to find a review site where the lender can’t have reviews removed or edited.
Borrowers should be wary if the lender is offering terms that are too good to be true. Lenders may offer these terms to try and get better reviews so more people will borrow from them. If something is too good to be true, it probably is.
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Sometimes online reviews can be negative even if a lender is perfectly reputable. Customers may leave a bad review even if they were in the wrong like if their account was sent to collections even after the lender reached out several times for payment. One bad review can wreck a lender’s rating and reputation. Keep in mind that reviews aren’t always accurate and you should take multiple factors into account when choosing the right lender for your needs.
What Should You Look For In A Lender?
When comparing lenders, you should look at more than just reviews. After all, you will be working with someone who has access to your personal financial information.
You should also consider loan details, including the interest rate offered, the loan’s terms, and any fees associated with a loan. Still, take these with a grain of salt. It might be worth paying a bit higher of an interest rate if online reviews portray a lender favourably. At the same time, even if an interest rate is very low, for example, you should probably consider running the other way if the lender’s online reviews are unfavourable.
Online reviews are just one tool that consumers can use when comparing lenders. As a borrower, you should always shop around in addition to comparing lenders before choosing one to work with. You can compare different loans, which will help to save you money. By taking the time and effort to do your homework, you can protect yourself from being taken advantage of and from paying more than you have to.
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