Lending Tree portends to act as an online conciliator between individuals looking for home loans and home loan lenders. The premise is that by connecting several lenders with the client, or rather- making several lenders aware of a potential customer, that the loan with the best interest rate will rise to the top of the stack. Lending Tree claims to offer debt consolidation and to lower one’s monthly interest rates. The company’s advertising campaign seems to suggest that Lending Tree will act as a negotiator for the client, urging banks to ‘compete’ for your business. While this is not exactly the case, using the site essentially amounts to shopping around for a better deal which, of course, is better than buying on impulse.
Lending Tree Home Loans takes your information, including your financial goals, and runs a credit check. At this point the service submits this information to a number of lenders. This is meant to create the impression that banks are competing for your business, when in fact the client is only receiving basic service offers from lenders who have been made aware of her or him by Lending Tree. Many customers have had the experience of receiving offers from lenders during non-business hours within minutes of submitting their query. This is suspicious, as it seems clear that in these cases Lending Tree has acted as little more than an advertising service for the lenders. This would mean that Lending Tree’s real clientele are the lending firms, who are paying Lending Tree for the vendor-to-customer contact. This is why visitors to the site are not charged for the service (not until after you take a loan), because Lending Tree’s real customer is the lender, not you, the lendee. Visitors to the site who have gone this far were typically bombarded with sales calls and junk mail from various lenders. Most offers, that even customers with great credit ratings were given, came with slightly higher interest rates than a credit union can offer. The only excuse for this is convenience, and perhaps the nominal benefit of some close facsimile of price comparison.
Perhaps the most dangerous aspect of the process is the fact that should a person look into a number of different offers her or his credit will be checked by each lender. If Lending Tree wants to offer a real product to consumers it should be to run one credit check and submit it to a number of different banks who will not then, run subsequent checks. Credit checks do appear on our credit histories and have the detrimental effect, while not necessarily lowering your actual credit score, but rather of making us look less stable to lenders and appear as more of a default risk.
For the well to do and those with disposable incomes Lending Tree Home Loans may be worth the convenience. Many of the site tools make it easy to use. But for middle and lower middle-class working people and families, it is simply not cost effective.
The main difference between Lending Tree and other brokers is marketing. Lending Tree portends to offer proactive mediation between lenders and the lendee. Their fees are taken from the lender who then takes it out of you, basically hiding the actual cost of the brokering service from the lendee.
Today, the loan business in the realm of service to the average person is languishing. Most major loan transactions take place between large businesses and larger brokerage firms, while payday loan and cash advance companies have for the most part taken up the low and middle income clientele. Organizations like Lending Tree work to obscure this fact by making the average home owner or buyer forget about the current international credit crisis that we are all subject to.
Knowing this, it may still be slightly advantageous to use the service if it enables the customer to effectively shop around. Failing this, I recommend you shop around for yourself. The problem is that you won’t know if it will work for you until you try it. If convenience is at a premium to you, try Lending Tree Home Loans. If your budget is skin tight, as most people’s are, do your own homework.
