I’m a Banking Expert: 4 Reasons To Take Out a Loan From Your Bank (And 2 Reasons To Go Elsewhere)
Written by
Heather Taylor
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Amen Oyiboke
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Planning to make a major purchase like buying a home or a new car? Chances are pretty good that if you don’t have enough money saved to cover the cost, you’re visiting your bank to discuss taking out a loan.
Is this the right move to make if you need a loan, or should you explore another financial institution’s offerings instead? GOBankingRates spoke to Chris Cucci, executive vice president at Climate First Bank, and Emily Irwin, head of Wells Fargo’s Advice Center, to learn when it’s a good idea to take out a loan at your current bank and when you might consider going elsewhere for a loan.
Four Reasons To Take Out a Loan From Your Bank
Your Bank Specializes In the Necessary Financing
Before you ask for a loan, you want to make sure your existing bank has the type of financing you need.
Cucci uses the example of Climate First Bank, a community bank that has partnered with B Lab to provide banking services while focusing on a mission to combat climate change. Cucci said at Climate First Bank, not only is there financing available for purchasing EVs and hybrid vehicles and taking out rooftop solar loans but there are also bankers with a wealth of knowledge and understanding about this type of financing.
You’re Able To Receive a Great Rate
“If your current bank has good rates and an easy online application process, it’s probably worth giving them a shot to help with your loan,” said Cucci.
You’re Able To Negotiate More Competitive Terms
What if the rate you’re being offered on a loan is only okay? Irwin said if you’re able to negotiate more competitive terms, including the interest rate, secure versus unsecured or other fees and costs, it’s usually a good idea to take out a loan from your primary bank or financial institution (FI).
“These terms may be available due to a relationship discount, or you may even have certain products or lines of credit available to you that may not otherwise be available at a bank where you do not have any assets,” said Irwin.
You Work With a Banker Who Understands Your Financial Goals
If you have been working alongside a dedicated relationship banker at your primary banker who knows and understands your financial goals, Cucci said this is another good reason to go with your existing bank.
Two Reasons To Borrow Elsewhere
Another Institution Offers a Great Rate
This is about more than Googling to find better rates somewhere else.
Irwin said a good rule of thumb to follow is to seek three competitive bids as you’re working through the process of obtaining a loan. You may find competitive rates at other big banks or there may be credit unions with even better rates that are worth checking out.
You’re Not Receiving Outstanding Service
No matter what the rates look like, if you’re not getting the customer service you need from your current bank you might want to consider taking out a loan somewhere else.
“Banks make money when you borrow from them,” said Cucci. “You should give your business to a bank that will take good care of you and make you feel valued as a customer.”
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