There are so many lenders in the market that choosing the right one can be difficult. In fact, there are very few comparative studies to help define who the good providers are and those with a less than solid reputation.

Word of mouth and a long trading history can be good guides to finding the better lenders. Size does not necessarily infer quality but can be a hygiene factor when looking for stability or backup should anything go wrong. Most of the large providers will have a tried and tested complaints procedure and value their reputation whereas those on the fringes of acceptability may have short trading histories or little by way of complaints procedures that actually work.

Some organisations run periodic surveys amongst consumers to see who they consider to be best in class in various categories. These studies are far from robust if probed but do provide a useful insight into what consumers think about various providers. There are many websites that specialise in financial information. Moneywise undertakes an annual survey and in 2009 its award for most trusted lender for loans under £10,000 went to Alliance & Leicester with Lloyds TSB being runners up. In the over £10,000 lender category the award also went to Alliance & Leicester but with NatWest picking up the runners up spot.

But most trusted does not necessarily equate to 'best' since this can be a subjective judgement based upon what criteria you wish to apply. Therefore, it is important to do your research on any lender before applying for a loan. Whilst that research may be fairly cursory for the well known brands, some of the newer or less well known lenders may need to be investigated more thoroughly. Certainly a great deal of caution should be used with any localised lender or door to door providers. Not only may they charge relatively high rates of interest but their enforcement actions upon default may border on aggressive.

As we emerge from the recession and the financial markets stabilise, new entrants have emerged to fill the gaps left by former players in the loan market. There are now a range of short term pay day type products on offer from text based phone services through to more formalised medium term loan providers. Ideally, you should look for a lender that is fully licenced by the Office of Fair Trading and belongs to a reputable trade organisation such as the Finance and Leasing Association. Membership of these bodies ensures a code of practice is adhered to and provides a remedial route in the event of a dispute.

Don't be fooled into thinking that any lender will do. You may think that once you have the money who cares about the lender. However, if things start to unravel for you and you need a helping and caring approach to get you through a lean spell then the choice of lender may be vital. Avoid heavy handed collection procedures and those quick to enforce their security or press for payment. Extra time spent reading their information pack and checking their credentials may be more than repaid later in the life of the loan.