FACT 2. Brand loyalty does not pay. Why your current bank is not incentivised to offer a better deal
Most of us do it; staying with the same provider longer than we should. A certain mobile phone provider and their lack of reception on the same day of every week (it's Friday) springs to mind!
Supermarkets are another one, and so, of course, are banks. In all of these cases, we have this feeling that because we are a loyal customer, somehow we are getting the best deal we can. If we are loyal to them, they will be loyal back.
But deep down we know it's not true. The best deals are given to new customers. Why? Because they are something like 6 times harder to get than existing customers, and cost far more in terms of marketing. Someone has to foot that bill, and it's the existing customer.
I had a prospective client very recently who assured me his commercial mortgage was on 1.5% over base with his current bank, but when he dug up the letter, he had reverted to 3.25% sometime ago! He was pretty angry, I can tell you. What's more, there was a better rate to be had elsewhere anyway. How do you know your business is on the best deal available?
In many instances I've seen with a client moving the bank, the existing bank comes back at the last minute and matches the new bank's rate, or betters it. If you're such a wonderful customer for them, why was this deal not presented before? It's because they know the chances of a business searching for a better deal elsewhere are very low, and they have not been under any pressure to offer you a new deal.
In many fields comparison sites now exist, but with business banking the information is far from complete. When it comes to commercial mortgage rates, it's even harder to find comparable information.
Why? Because every business's deal is different, and most do not shop around enough to find the best rate and package.
So you're thinking of trying but it's a lot of work, and daunting. What's the best course of action? Use a non-fee earning commercial finance specialist.
We have sight of what the marketplace looks like, and know what rates/terms are available, where they are available, and in which sectors. Coupled with the national and regional contact, Top-Down approach covered in Fact 1, a business can quickly and efficiently find out where the best deals lie. In some instances, it could even be with your current bank, but you won't know until you investigate and put your current bank under enough pressure to worry about which bank your business may end with.
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16 Facts At a click and a glance
1 - Why going into the High Street branch is not the best way to source a commercial mortgage, business loan, or business banking manager
2 - Brand loyalty does not pay. I'll explain why your current bank is not incentivised to offer a better deal
3 - Bank managers that understand your business do still exist, but they are not where you used to find them. Find out where they are, and how to access them
4 - The good news about Business Bank Credit policies: the criteria for assessing businesses is changing regularly, and in the main terms are improving
5 - Why your perfect borrowing history is of little relevance, and why its not personal
6 - You can profit from moving bank, right now, by accessing a much misunderstood fund, as well as improved terms
7 - Different banks like different sectors: what's happened
8 - State-owned banks: an update on where they are
9 - Privately owned banks: an update on where they are
10 - Interest only commercial mortgages: today's marketplace
11 - How a change of mindset can be of great help
12 - Why banks want to know your inside leg measurement, and why it’s not personal
13 - How to work out if a bank will lend to you, right now
14 - Debt service cover: what it means, why its important and the good news coming your way
15 - Why you may need to bank with more than one from now on
16 - If your business does not own property, nor wish to buy one, there are other, new, niche financiers available that can help with your requirements.
About Chris Davidson
Chris Davidson is Managing Director of Discover & Invest Ltd.
He believes passionately in providing businesses with market-leading financial insights that have a positive impact on the bottom line. As a result, Chris helps get the best rates and terms available at any one time.