A loan is a serious long-term commitment, and it will have a considerable impact on your life for the following years, so it's not something to be treated lightly. You should never take the first offer that comes along – especially when it comes in the mail, as an ad, or a pop-up while you're browsing the net. Take your time to evaluate
several offers, ask for quotes, and, once you have decided what you need, try to negotiate even more. Good negotiation skills could save you thousands of dollars, so don't be shy about it.
A Loan Is a Product
One of the biggest mistakes people make when shopping for a loan is that they don't think of it as they'd normally think of any other product. Most people are so focused on what they want to achieve with that loan, and so stressed out by the possibility of rejection, and all the paperwork they have to provide, that they're actually thankful when they find a lender that approves the application, and don't think twice about negotiating.
Lenders want your business as well. They make a profit, so it's just like any other business transaction, you don't have to be thankful for buying something from them. You have leverage, and power to negotiate, and you should use it every time.
When you take a loan to buy something, you probably spend a lot of time searching for the best and cheapest product – whether it's a house, or a television set, or a new car, you've probably researched for days or even months, until deciding what you want. You should then treat the bad credit loans the same way – research until you find the very best deal, and then try to make it even better.
Always go into the negotiation knowing exactly what you want, and try to have a clear estimate of what you may realistically obtain. You won't get a bank to drop the interest rate by 5 points, but you may obtain a discount on the fees, or changes on other terms that work best for you. Also, keep your options open: the competition among lenders is huge, which means you should shop in more than one place, before making a decision. For example, if you want to buy a car, and you go to the dealer without any backup plan, you may be tempted to accept whatever source of financing the dealer suggests – which is rarely the best option for you, on the long term.
It's Not Always About the Money
Odd as it may sound, a loan is not just about the money. Of course, you want to try and lower the interest rate or the fees, if possible, but there are other things that may be easier to obtain, and that may provide even more useful in the future. For instance, it's always good if the lender agrees to cut the penalties for early repayment, so you will be able to save a lot of money if you can repay the full amount sooner than anticipated.
In addition, it's important to develop a long-term relationship with a trusted lender, and a bank officer who knows you and understands your situation may be of great help when you need it most. Last but not least, if you do get turned down for unsecured loans, don't despair, and try to find out the reasons why you were rejected, so you can work on improving those aspects, and return with even more negotiating power the next time.
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