Let’s face it. When you are coming up with a list of the most enjoyable activities, finding a loan is probably not going to make the cut. For many people it can be a stressful process. That’s why one of the first things we did when we started developing RateBunni was to get your feedback. What don’t you like about the lender search process and how could we make it better? Here’s what we found out.
Goal: To understand the lender-search journey
What is the first step in searching?
- “Our realtor”
- “I had used the company before”
- “Word of mouth – specific recommendation”
- “Google”
What is easy to do?
- “Nothing”
- “It was easiest to go with what/who was already familiar to us, and who already had much of our information. But I’m not sure that was the best deal.”
- “The application”
What is hard to do?
“Wasn’t difficult, but time consuming…”
“Researching to find the right lender for my needs”
“Comparing rates. Listening to the spiels when all I want Is a simple answer to question. What is your rate for x dollars for x years for x amount down when the credit score is x. PERIOD “
What is most important?
“Cost/Interest/Terms/Length/Reputation of lender”
“apr, clear terms, ease of application, removal of erroneous liens, ease of working with lender.”
“Low interest rates, low fees, great customer service, ease of entire process and quick loan completion”
Summary of Findings
Applying Unmet Market Needs To Product Development
Trust
The research showed us a few very clear findings. First, when searching for a lender, there is still significant lack of trust in online solutions, since so many people are leveraging word of mouth. It is amazing that in this day and age, people reported following the recommendations of their neighbor, mother-in-law, real estate agent, etc. There is no trusted online source.
Breadth of Information
The second major finding what the lack of completeness in current solutions. Existing sites only show a limited number of lenders, and only those who have business relationships with the host site. People are left with a limited set to choose from, and no way of knowing what other deals might be available to them.
It’s More Than Just Interest Rates
When searching for a lender, most current providers place the greatest prominence and attention on interest rates. While this may still be the most important factor, it may not be for each person every time. Also important to making a decision are fast and quick approvals, having an online application, online rating and reviews, mission & values of the lender, the lender’s involvement in their local community, their service area, and more. Unfortunately, the current solutions in the market only account for a few of these.
Research Method
For this research, we designed a survey and administered it to 1400 of our crowdfunding investors (a highly engaged and finance-savvy group) and another 200 or so paid participants.
- The median age was 46-55
- Respondents were 70% male, 30% female
- Most (50%+) reported over $100,000 in household income
- All were based in the United States.
Survey Questions & Detail
How Do You Find a Lender?
We started our survey by asking how you found your last lender. By far the most popular answer was online. While there are still a number of people who get their recommendations by word of mouth, or by just going with their regular bank, it’s clear the way we search for loans has changed a lot over the last 20 years.
1. Think about the last loan you applied for (home, auto or personal loan). What were the ways you found the lender?
Top Considerations when finding a new lender:
- Word of Mouth (Friends, referral, recommendation)
- Existing bank relationship
This was an extremely surprising result. After tallying all the responses, the number one answer was a word of mouth referral! Can you believe in the year 2021, this is still the most popular way to find a new lender? To us, this indicates a lack of online resources which can be trusted.
2. When searching for a lender, what are your top 5 most important considerations?
Most Important Considerations
When you are trying to decide which lender to go with, what are the most important considerations you have? As you might imagine, interest rate was the most common response in our survey. Other responses included quick approval, great customer service, and proximity. Tracking down all of that information can take a while. RateBunni addresses all of these considerations in one place. Besides showing you the interest rates for hundreds of lenders, you can see whether they offer instant prequalification, customer reviews, and branch information.
Top Considerations when finding a new lender:
- Interest Rates
- Fees/Costs (ex: pre-payment penalties, closing costs, hidden fees etc.)
- Customer Service
- Reputation/Trust/Ratings & Reviews Integrity/Reliability/Honesty
- Local
3. Think about the time you got your last loan. Now, list the steps (in order) you took to find that lender.
Although for this question we looked at all the steps to find a new lender, we were primarily interested in the first step. This is a good indicator of where people are currently turning to for help.
First step in lender-searching:
One thing we fully expected was searching online to be number one, but the distance between it and a personal recommendation (word of mouth) was much closer than expected. This was a huge wake up call to us, that such a large percentage of people are still getting lender recommendations via word of mouth. It’s 2021 after all!
4. What about this process was easiest?
It’s important to capture the good and the bad, so we can preserve or enhance anything that is currently working well. Many people were frustrated with the entire experience, unless they chose to return to their current lender for an additional product. Of the segment looking for a net-new lender, online features were found to be the easiest (but only if they were offered).
Easiest steps of the lender-search process
Key responses:
- “Nothing” “None”
- “All of it is a hassle”
- “Application was easy to complete online”
- “I already knew the lender”
- “I was referred”
Word frequency in responses:
5. What about this process was hardest?
Perhaps the most obvious question, as it’s the most telling. Responses indicated virtually the entire search process had frustrating moments; the most common were lack of choices, the number of lenders to choose from, and lack of trust and customization when searching. Once a lender was selected, the frustrations varied by the level of digitization in the application process.
Hardest steps of the lender-search process
Word frequency in responses:
Key responses:
- “Not many lenders to choose from”
- “Researching to find the right lender for my needs”
- “Trying to decide which company to go with.”
6. Most Important Lender Considerations (Ranked List)
For a simpler way to analyze the frustrations, we asked the same question but provided the options for the respondent to rank-order from most important to least important. The most important considerations are fees/rates, fast approval, online applications, ratings & reviews, and mission & values.
Product Considerations
This market research study showed us the clear opportunity ahead of us: to provide a tool which is complete and comprehensive, personalized, and unbiased in regard to revenue. With RateBunni, hundreds of lenders are featured (whether they pay us or not), and by showing more than just rates, people can make the right decisions about which lender they choose. The goal is to build a truly inclusive set of choices, with more information than anywhere else, and present it in an easy-to-use, personalized platform.