Looking for a Lender

All lenders are required by law to meet certain standards in their relationships with borrowers or would-be borrowers. For example, it's illegal to discriminate against you based on, but not limited to, your gender, race, ethnicity or marital status. But some lenders go beyond these requirements—sometimes well beyond them.

Finding the right lender can be as important as selecting a loan that benefits you and your family. Here are some of the things to look for as you compare potential lenders:

Clear explanations of available credit options

You're looking for a lender who will explain the features of all loan options, how they compare to each other and ways each one could meet your needs. If you don't qualify for a particular loan, your lender should give you an explanation why.

Lenders know that educated borrowers who understand all their loan-product choices and are clear on the terms, conditions, similarities and differences of each are likely to be satisfied customers. That's not only good for the customer, but good for referrals and repeat business.

When considering borrowing money, be sure to ask potential lenders questions such as:

• What types of loan products do you offer?
• What are the key similarities and differences among these products?
• Which of these loan products would I qualify for to meet my current need?
• Why don't I qualify for other loan products?

Clear disclosures and forms

It should be easy to read and understand all forms and disclosures you need to complete and sign. You're looking for a lender who will explain what each document means and will answer questions you have about specific points. You'll want to be on guard if a lender says you should sign something that isn't completely filled out or that you haven't read and understood.

No pressure or hidden fees

Importantly, a lender should never encourage you to borrow more than you can afford or pressure you to agree to terms you don't understand. A reputable lender will never hide fees or costs or pressure you into "signing today" in order to receive favorable terms. While it is true that interest rates can change quickly, encouraging quick agreement is usually an attempt to rush you into a decision.

The bottom line is that you should never feel pressure to sign any document you do not understand completely or make a commitment you're not confident you can meet.

Good service

Good lending practices don't end when the loan is closed. You're looking for a lender who is interested in you after extending you credit and is ready to answer questions or help you resolve potential problems.

The support services you should expect include:

• Customer service. Is there a physical office or building you can visit to ask questions or drop off your payment, a customer service 800-number, and easy-to-use website? How does a lender treat its customers in calls or letters that follow up on missed or late payments?
• Loan payment processing. Is your loan payment credited to your account in a timely manner? Does the lender make it easy to make a payment in a different manner (e.g., over the phone or via their website)?
• Loan statement. Do you receive your loan or billing statement in a timely manner each month with enough time to make your payment? Is the statement easy to read and in an easy-to-follow format? Can you find your total balance due, minimum payment due and the due date quickly?

Good servicing can also mean providing ongoing financial education or communication of special offers on products and services to borrowers and other customers.