Negotiation is an important part of getting a loan. If you know how to properly go about negotiating with a lender, you can get the best possible terms. These days most lenders have come to expect a little bit of back and forth before the loan agreement is finalized. This article will give you some helpful tips for getting the best possible terms for your next loan.
Don’t Get too Cocky
It is crucial that you refrain from becoming overly confident in your own abilities of persuasion. Most lenders are willing to negotiate, but only to a certain extent. You need to understand your limitations before having this sort of conversation. If you go into a negotiation with a level head and realistic expectations, you should come out of it just fine.
Before you start negotiating with a lender, you will need to be organized and prepared. Make sure that you have all the necessary documents ready. This includes your proof of income and employment and anything else you might need. If the lender sees that you are organized, they are going to be more willing to help you out. This can help you out quite a bit when it comes to getting the best possible terms for your loan.
Get Any Current Debts Taken Care of
One of the best ways to come from a place of strength in this sort of negotiation is to have no outstanding debts. This is something that most lenders look for in applicants. If you are already saddled with a substantial amount of debt, you probably won’t be able to get very good terms. In fact, you might not get approved for the loan at all. You need to get a full accounting of all the money you owe creditors before trying to get a new loan of any kind. This will show the lender that you are reliable and trustworthy.
Choose a Private Lender
Private lenders tend to be more flexible and open to negotiating than most big banks. Borrowing from a private lender is also a good thing because it will provide you with a fast way to get the money you need. It can take a long time to get your money from a bank even after your application has been approved. These days lots of people in the UK are applying with these lenders because they have a lot to offer.
Go for a Shorter Term
Many lenders will try to get you to go with a longer term so you end up paying more interest overall. At first glance it might seem like a longer term is better, but it only costs you more in the end. You should try to get a short term so you can save yourself money. This will ultimately work in your favour. It’s good to have a term that gives you enough time to pay back the money you borrow without being unreasonably lengthy.
Get Some of the Fees Waived
If you are applying for a mortgage, you should try to get the application fee waived. This is something that a lot of lenders are actually quite willing to do, and all you have to do is ask. Origination fees are also common, and they too are often waived with little persuasion. You will be surprised at just how little effort it takes to save yourself money in this particular way.
Work on Lowering the Interest Rate
Depending on what your credit is like, your ability to negotiate your interest rate down could be severely limited. It is, however, still something you should try doing. A lot of lenders are willing to work with approved individuals to get them to a rate that is fair. If you think the rate you were quoted is a bit high, you can always try talking them down. Just make sure that you don’t set any unrealistic expectations.
Prequalify for the Loan
You should also prequalify for the loan you want before you start any negotiations. By doing this you will know what to expect in terms of the interest rate and other details. If you submit an application and get approved, you’ll be in a better position to negotiate the details of your loan. This is a good idea regardless of what type of loan you are after.
A little bit of negotiation can you get a long way with a lender, but you have to be reasonable. There is only so much power and control you will have over the terms of your loan. You also need to remember that your ability to modify these terms depends on your credit, job history, income and other factors. This is something that you should at least try to do before accepting whatever initial offer the lender gives you.