Negotiation is always an option even if you are getting what seems to be the best loan deal in the market at any particular time. Lenders price loans with that in mind since they don’t actually expect you to take the loan terms that are initially offered. Unfortunately, not that many people actually negotiate, and those that do don’t do it as they should.
Instead of leaving it up to the bank to determine all the loan terms or even accepting the next best terms offered, you can do certain things to get loan terms that the vast majority of people are unable to get. Always keep in mind that banks have to give out loans to make money, which means you aren’t the only one getting help. It is a symbiotic relationship, and as a customer, you can always get better terms.
Here is what you should do:
Try to develop a relationship with the loan officer in your bank
Always keep in mind that banks offer the best loan terms to customers they know or have a relationship with, which is why it is important to cultivate your relationship with the bank early on. To effectively do that, you should know which bank employees matter the most.
While bank managers and tellers can help you get loans, it is loan officers who have in-depth knowledge about the best loans and terms. Simply put, a loan officer with a good understanding of your financial situation is best placed to help you find the best loan and terms. So, take time to know your loan officer before deciding to take out the loan.
Identify the needs of your bank
It is also important to know what the bank needs at that specific time. Banks depend a lot of interest income to make money, which means that knowing how well your bank is doing will help when it comes to negotiating the most suitable terms.
For instance, while a bank that’s currently struggling might be more motivated to give out loans, a bank that’s performing well is more likely to be willing to negotiate. The most important thing is to find out how motivated the bank is to bend their terms.
Develop a Negotiation Strategy Beforehand
Always prepare beforehand to ensure that you have the upper hand when it comes to negotiations. You should first find out what aspects are of utmost importance to you (non-negotiable) along with those that you are willing to negotiate.
It is also important to know how far you are actually willing to negotiate. You should ideally negotiate the loan issues that are less important to you. Advance preparations ensure that you have the upper hand at the negotiation table.
Bankers usually respect borrowers that are able to read in between the fine print. If you can compare loan terms for what they are as opposed to listening to your lender say just how great the terms are, you will erode the loan officer’s power and be in a much better position with regards to negotiations.
The idea here is to ensure that you gain respect and take part in the negotiations as an equal rather than being the pigeon.
Never Accept High-Interest Loans
One of the most important factors to consider when negotiating loans and terms is interest since it determines how much more you are required to pay for money that’s lent to you. So, always avoid accepting high-interest loans regardless of your credit situation.
Borrowers that show a willingness to compromise when it comes to interest rates almost always don’t get the best terms. In fact, you need to be ready to walk away if your bank seems rigid about the high interest rates.
While different banks may charge different interest rates, you can get a single digit APR with good to average credit. If you have bad credit try instant payday loans from Loanza.
Interest might be one of the key factors to consider when negotiating for the best loan terms, but there are numerous other factors to consider such as fees payable, security arrangements, payment schedule, etc. that directly impact the loan’s final cost.
For example, you should choose flexible repayment schedules and an appropriate repayment terms that matches your cash flow. The security you are required to put up along with the fees payable should not be excessive.
Always remember to negotiate on all these things including loan restrictions. You might be surprised by just how much banks earn over and above the interest charged.