Negotiating the terms
and conditions of your loan is your right. Initially, many people might feel a
little uncomfortable about negotiating their loan terms and conditions with a
lender. But, if they follow some of the these negotiating tips, they might
learn how to be successful.
Loan Negotiating Tips
Bankers continue to have a well-deserved prestige associated with their industry. They have their own banker’s hours and if they work for the largest banks, are given the title of “Too Big To Fail” (TBTF). So, how are you going to be successful negotiating terms with these powerful lenders?
The Harvard Business Review listed a number of ways for you to level the playing field during your negotiations with a financial institution. Successful negotiators understand the position of both parties. This allows you to control the conversation.
Create a win-win situation for both parties and your negotiations can be successful. Each party has his strengths and weaknesses. It pays to do your research, so you know these like you know the back of your hand.
Know Your Strengths
It is wise to write down a list prioritizing your needs for the loan – amount, length and cost. You should have base minimums and also a range for what is acceptable. Consider trade-offs that would or would not be acceptable.
Everyone wants to feel like they were successful.
Develop an opening offer that includes a few provisions that you are willing to compromise on. Pretend like these are important initially, but slowly give ground. If the lender can successfully modify these, he might feel good about giving into your other more important demands.
Know Your Weaknesses
Wise negotiators will also be honest about their own weaknesses. A good starting point is to look through a free copy of your credit report. This will list all of your financial accounts, types and history.
Carefully review your repayment history. All lenders have access to this credit report, so be honest. Identify areas that you might be somewhat deficient in.
The lender has your record and will wonder why he should lend to you when you have some credit problems. Create a reason for why the lender should trust you. Show how you have changed and repaired any negative issues.
It is particularly beneficial for you to renegotiate loan terms if credit improves. You should be rewarded for good behavior. A good credit score means less risk and you should gain credit for your responsible actions.
Know Lender Strengths
Of course, some organizations like to pretend that they are everything to everybody, but that is simply impossible. There are many types of financial institutions out there – large banks, small banks and non-traditional lenders – each has a different customer, financial market and proficiency. A wise negotiator understands whom he is dealing with.
Large banks prefer to deal with large governments, corporations or wealthy individuals. Multi-national corporations have plenty of accountants and attorneys, who can fill out paperwork. They are used to dealing with borrowers with numerous assets, good credit scores and a long credit history.
Small banks are experts in the characteristics of their local communities. They might be on a first-name basis with their clients. They understand local affairs and small businesses.
Non-traditional lenders, like Gladiator Lending might have expertise developed from other financial sectors. Alternative lenders might be more independent than banks – new lenders might have more money to lend. They also might have more decision-making authority.
Know Lender Weaknesses
Large banks are very institutionalized. These large financial institutions must adhere to numerous laws, including some international banking rules. They might have more red tape and bureaucracy – the final decision might not be made at the local branch.
Small banks tend to be more conservative. They want to develop a close relationship with their clients through regular banking activities before they extend loans. Smaller financial institutions might have very specific market niches, which they focus on.
Non-traditional lenders, like Gladiator Lending are more likely to give you an answer quickly. They can negotiate with you directly because they have the final say. Alternative lenders will try to gauge you as a risk in loan repayment and find terms that properly compensate them for making the loan.
Find the Best Fitting Loan
When seeking a loan, it is wise to consider both large financial institutions, such as banks as well as new lenders, like Gladiator Lending. Each lender has its own terms and conditions; so, if you research your options, you might save considerable money in the long run. Negotiate your loan terms for the best deal.