How Do Loan Comparison Websites Make Money?

You can find a comparison website for almost anything you're looking for - from car loans to hotel rooms, insurance to bank accounts. Someone has to run these websites, and the companies that run them must pay their employees, so how do these sites make money?

This article will focus specifically on car loan websites and how different Australian car loan comparison sites make their income.

How Do Car Loan Comparison Websites Make Money?

Loan Comparison websites make money through a number of different methods:

• Referral fees when someone clicks through to a provider listed on their website.
• Commission on loans taken out directly from the website.
• Advertising such as banner ads that appear on the site.
• Database subscriptions - sharing the market information they collect.
• Rating licence - companies can pay to display the website logo and rating of their service on their marketing.

Not every comparison website uses all of these methods, and fees can vary. If you use a comparison website, you can find out how the website gets paid by reading the Financial Services Guide.

When choosing a comparison website to use, you'll get the best result from a website that is accurate, transparent and impartial. Ideally, the site will:

• Include most of the providers available in the market
• Be independently owned and not associated with providers of the product or service you need
• Disclose exactly how & how much they are paid.

Australia's top loan comparison websites

Here's a look at how some of the websites you are most likely to use get their income, so next time you are researching a loan, you know exactly what happens when you click through to a loan application.

Finder.com.au

One of the largest and best-known comparison websites in Australia, you have probably used this site to compare anything from shopping deals, home loans, credit cards, travel deals to tech & telco offers.

Finder generates revenue through:

• Display advertising
• Qualified referrals

'Display advertising' are the ads that appear either as a square, a rectangle in the margin, or a banner. Finder is paid for every 1,000 people that see an ad displayed on the website.

A 'qualified referral' could be a click through to the website of the financial institution, or the completion of a transaction with that finance provider.

Finder is owned privately by 2 shareholders, and doesn't have equity links to any of the providers compared on the website.

Rate City

This established and comprehensive comparison website has information on home loans, car loans, credit cards, personal loans, banking, and superannuation.

Rate City generates revenue by:

• Generating leads for financial institutions
• Website activity including display advertising, sponsorship for 'share of voice', and cost per click for product references.
• Fee or commission where a product from a financial institution is provided by Rate City.

A 'lead' for a financial institution is generated when you click through to the provider's website, or you request the provider to contact you regarding a product that appears on the Rate City website. It's a marketing term that refers to a potential client asking for more information.

'Share of voice' sponsorship is where a provider pays to have their display ads on a percentage of the pages related to the relevant product.

Rate City is a proprietary limited company based in New South Wales.

Mozo

Mozo is a comparison website that's been around since 2008. It compares home loans, credit cards, personal loans, savings accounts, term deposits, bank accounts, travel insurance, and utilities.

Mozo generate revenue in two ways:

• Fee for referrals
• Display advertising

When you click 'go to site' from a comparison page you'll be transferred to the provider's website, and Mozo may receive a fee.

Mozo are also developing a ratings system, so it's possible that in future they could charge providers for the right to display these ratings on their own marketing materials.

Mozo is a proprietary limited company based in Sydney, New South Wales.

Even though you pay a fee of some kind to use use a loan comparison service, you often still get a better deal that if you'd gone directly to the provider to take out the loan.

If you are currently comparing your loan options to buy a car, sometimes comparison websites can be confusing, as they give just general advice. How do you know which loans will be best for you?

To find this out you might decide to get complimentary, personalised car loan advice from a lending specialist at Positive Lending Solutions. You will learn which products and lenders can offer the best deal based on your exact financial situation and only apply for a loan after a full assessment when you want to proceed.