Usually, when people try to get a personal loan, they are the ones who first accept a deal that is offered to them by a lender. And just as with any financial product, the terms of a personal loan may be often changed through negotiation — mainly if you have a good credit history. Interest rates, processing fees, as well as repayment flexibility, are all the things that you might be able to improve, if you act purposefully and wisely.
Negotiating your terms can lead you to a bank, an NBFC, or an online personal loan saving you money and making repayment more manageable.
Know Your Creditworthiness First
First of all, you should check your credit score before you even start negotiating. If the score is high (usually 750 or more), you are in a very good position to negotiate. A high credit score gives the lenders the impression that you are a reliable borrower and hence their investment will be less risky.
Should your score be good and you have repaid your debts on time, the lenders might be willing to reduce your interest rate, give you less processing charges, or provide you with more repayment options that are flexible.
Compare Multiple Offers
Before you decide to go with anyone, check out what at least three to five different lenders have to offer and then make your decision. In this way, you will have a clear idea of the interest rate and fee structure prevailing in the market. Many lenders also use your credit report to generate pre-approved or pre-qualified offers when you are applying for an online personal loan.
With this data in hand, you can negotiate for better terms. If another lender offers a lower rate or faster disbursal, share this with your preferred lender — they may match or beat the competing offer to retain your business.
Negotiate the Interest Rate
The example of your situation could be:
- Having a high credit score
- Having a good income
- Having no big debts
In this case you are in a good position to ask for a rate lower than the one that is usually offered. Use respectful but assertive tone — ask if there are any such things as loyalty discounts, seasonal offers, or relationship-based concessions.
Ask for Waiver or Reduction of Fees
Usually, a processing fee is involved in a personal loan that varies from 1% to 3% of the loan amount, this is the major part of the additional charges. These charges may pile on.
In the course of negotiation:
- Find out if you can get a discount on the processing fee or if it can be completely freed
- Ask about the prepayment penalties — some lenders give the option of zero charges, after 6–12 months
- If you want to repay early, clear up what part of the money you have to pay is the foreclosure charge
When you go online to apply for a personal loan, you are less aware of these charges as they may not appear at the initial application stage, therefore, you have to ask before you accept the conditions.
Offer to Maintain a Relationship
If you already have an account or fixed deposit with the lender, use this to your advantage. If you have a longer relationship with a bank or other financial institution, you will most likely be treated better than others who are just coming in for a short visit.
Besides, you may also come up with such an offer as to open a depository of your choice, be it savings or recurring deposit, or keep a minimum balance, in return you can have better loan terms.
Choose the Right Time to Apply
The time of entering the market is as important a factor as the time of the day in deciding the success of your negotiation. At the end of a quarter, banks are more eager to discount as they are in need of a certain volume of business. Be on the lookout for such periods when you apply.
Apart from that, if you have recently been given a raise or a higher position, telling this during the interview will be like a weapon in your bargaining for better conditions.
Improve Your Debt Profile Before Applying
If you have other loan accounts or credit card dues going on, those should be cleared first before you apply for new ones.
Borrowers who do not seem over-leveraged and demonstrate a strong repayment capacity based on their current income and liabilities are the ones lenders give preference to.
Get Everything in Writing
The point is when you have arrived at a deal, the loan conditions should be given as per the agreement, and don’t depend on spoken words. Both in case you secure the online personal loan or in person, you must have the copy of the last terms before the disbursal.
This not only protects you from future disputes but also assures that the benefits you negotiate will be there.
Conclusion
Negotiating better terms on your personal loan is completely feasible and oftentimes it turns out to be simpler than one would expect by adopting the right strategy. Through keeping a good credit score, checking many offers and being aware of your financial strengths, you can bring down interest rates, avoid hidden fees, and come up with a repayment plan that suits your needs. The main point is to look at the process as a partnership with your lender instead of a one-sided transaction. By utilizing smart negotiation skills, your online personal loan can become not only affordable but also stress-free.
