It may seem really straight forward that it would make sense to compare interest rates in order to work out which loan will give you the best deal. However, there are more factors than just interest rates that you should consider.
The cost of the loan is usually the most important factor for anyone deciding which to take out and this makes sense. You do not want to have to pay more than you have to when you are borrowing, especially as it can be really expensive. However, the interest rates are not the only cost of a loan and so if you are looking at the cost then you need to make sure that you take all costs into account. There could, for example, be a setup fee. This is usually a one off administration fee and you need to consider this when looking at costs. There is also the possibility that you may need to buy additional fees in the future if you miss a repayment or if you want to repay the loan early. It is worth looking at all of the fees, even ones that you feel will not apply to you, so that you are aware of what to expect should you be in the situation where you need to pay these. If interest rates are similar then this could be a reason for picking one lender over another.
It is also really important to make sure that you can handle the repayments. Take care to look at how much you will be expected to repay each month because you will need to ensure that you can pay it. You might think that because the amount you are borrowing ill not differ between lenders is the same, then the repayments will be the same, but this may not be the case. The amount you repay is not only determined by how much you borrow and how much the interest rates are but also by how long you have to repay it. The longer the term of the loan, the lower each repayment will be. It is important to realise that if you borrow money for longer, you will be paying more in interest, so even if the interest rate is lower, if you take longer to repayment, you will pay more interest payments and in total your loan costs could be higher. This means that you need to not only make sure that you can afford to pay back the repayments each month but also that the loan is not massively expensive because of it having a long term. You will need to find a balance where the loan is affordable for you on a monthly basis but overall not too expensive when you add up all of the costs.
If you do get into a situation where you are finding repayments a struggle then it would be useful if the lender was flexible and willing to help you. Some lenders have a reputation for being more flexible than others and so it is worth finding out a bit more about them. If you go to money forums you will see discussions on things like this which should be helpful to you. It can also be wise to talk to friends and family about their experiences and see whether they can make any recommendations or let you know whether they would avoid using any particular companies.
You may also like to go with a lender that you have heard of or perhaps one that has a local branch or that you already use. This is very much down to personal choice as just because you have not heard of one; it does not mean that they will not be as good as others; in fact they could actually be better. However, many people do just prefer the familiar. There are also some people that like to have a local branch so that they can have a face to face discussion with staff members, if they need to.
So there are many things that you need to consider when you are thinking about whom to borrow money from. Obviously the cost is important but you also need to make sure that you will be able to manage the cost of the repayments and that the lender has a good reputation and fits with your specific requirements.