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How to negotiate for low interest rates
Do you want a loan at low interest rate? Lending institutions make you believe that interest rates are non – negotiable. I have good news. This is not the case. You can always negotiate a low interest rate.
Negotiating in order to get the best interest rate is key to making extra money in the long term.
Here are the steps on how to negotiate the best interest rates.
- Assess your relationship with the lender
A good relationship with the lender is one of the factors that will be considered before them agreeing to lower your interest rate.
- Improve your credit score
Lenders will use your credit score and your debts to assess the probability of you being in a position to make monthly loan repayments.
If you have a low credit score, your interest rate will be high. You can improve your credit score by paying off your bills on time and paying off your debt.
- Shop around
Do your homework and know the lenders and look at other available lenders. Note that lending institutions compete with others to acquire more customers. If you find a lender similar to the one you are considering but at a low interest rate, note the other company’s name and terms. Ensure to mention it to your lender when you reach out.
- Organize a meeting with your lender
Having a one on one meeting with your lender will give better chances in getting a lower interest. This is because physical interaction is more compelling than communication on the phone, email or written proposals.
Be punctual to the meeting and present your proposal well.
- Be polite and patient
During the negotiation, do not become aggressive or argumentative even if the lender is not dancing to your tune. Also, do not be over-optimistic so as to not be too disappointed if the lender does not agree to your proposal.
- Ask about and negotiate on associate fees
Apart from the monthly interest, there might be other fees associated with the loan. Ask your lender about them. Most of these fees are negotiable.
- Lock in the interest
Once you get a rate that you are comfortable with, Lock in the interest rates so as to protect yourself from potential increasing interest rate. However, in case the interest rates goes down while processing the loan, ask your lender about the possibility of getting the lower interest rate.
- Prepare to walk
Not all negotiations go smoothly even when you are in the right. “If your creditor won’t cooperate, play hard ball,” recommends Dvorkin. “Simply tell them that you have other options and you’ll have no problem making monthly payments to them.”