The institutions responsible for granting loans are banks and finance companies. Deciding whether to contact one or the other is not easy and can only be done after a comparison of the offers.
Today, compared to the past, it is much easier to make comparisons since almost all these bodies allow you to directly calculate an online quote.
But how do banks and financial institutions operate? The former provide loans only to their customers while the loans do not. In addition, the banks operate directly, or lend their money, while the financial companies rely on credit institutions, acting as intermediaries. From this different position a first difference emerges: the financial companies earn by applying an increase in the rate at which they themselves are subject by the banks; this might seem like a huge limit, which would make the loans more expensive for the customer than the banks. This is not true because the financial company, obtaining large sums of money, obtains particularly advantageous rates from the banks.
Another difference is the availability of diversified products and the negotiation margin. Banks often have few offers while financials, having to be more aggressive on the market, offer many more. Furthermore, the negotiation margin on the conditions (interest rates, opening and closing costs) is greater in the financials, again for the same reason: the financial company has loans as its main business, and therefore the need to do so. The banks, on the other hand, operating on many fronts, first of all investments, are less “forced” to make many loans to make money on interest.
How to choose then?
The basic idea is this: it may be appropriate to start from your own trusted bank, especially if you have been a long-time customer and a relationship of mutual trust has been created, but do not stop there at all. Making more estimates is fundamental, both online, because it is much more convenient, and offline, that is going to other banks and financial institutions, to understand especially what the margins of negotiation are, for which it is much more likely to make a idea by asking, in a very informal way, who offers the loan.