By Younas Chaudhary
In the current environment, finding happiness can be elusive because the price of everything from homes to cars to eating out has gone through the roof. That is why it’s increasingly important to do your research and negotiate with lenders to secure low interest rate loans if you plan to borrow money.
Ninety percent of people who are in front of a lender have only one question to ask: What is my monthly payment? Wake up and smell the coffee! Most consumers never ask about the interest rate or the terms of the note.
One of the most important factors in determining your borrowing power in the US is your credit score. If you have a good credit score in the 750 plus range, then every lender wants to talk to you. They do not want to help you, instead they want to give you more credit loans hoping you will make only the minimum payments to retain your high credit score!
Good credit matters a lot when negotiating lower interest rates with lenders. However, in an inflationary period, creditors are looking at ways to make more money. When seeking credit always talk to multiple lenders, negotiate, and do not take the easy route.
Want to buy a car on credit? The most important guy in the dealership is not the salesperson but the finance guy who sits in their tiny office trying to negotiate the loan terms and your monthly payment amount. That person wants to bamboozle you into buying more items on credit like useless under coatings, interior packages, windshield repair plans, and extended warranties so that the amount owed to the dealership goes up and up!
When purchasing a car, walk away boldly if you feel you are taken advantage of. Have you ever seen car salesperson walk away and then return from their hiding places a few minutes later saying that their boss will not compromise? Do not fall for these antique marketing techniques. Instead, be a learned, sophisticated customer.
Paying an upfront deposit can help you negotiate a better deal and lower your interest rate. For example, if you are to purchase a car that costs $20,000, try to put 20 percent down and negotiate for a lower interest rate from the lender.
Skillful salesmen are trained to push you to sign things electronically so that they don’t show you any paperwork. Do not sign on the dotted line unless you really read through the documents and understand the interest rate being charged, late fees, and other terms of the loan.
When securing credit from banks, never be emotionally attached to your neighborhood bank that is asking for a higher interest rate or has denied your loan. There are so many lenders out there and just as you are trying to find credit, there is a banker looking to find someone who can take a loan!
Be consistent and persistent as you deal with lenders and if you do not get the lower interest rate at one, shop around until you find the right one. There is always someone willing to take a risk on you!
This is true for new immigrants, who as soon as they get out of the airport fall into the great American debt trap- credit cards! For many immigrants, getting credit from Visa and Mastercard is like being given candy and they feel very good about using it often until they bury themselves in debt. They get trapped by others telling them that their credit scores will go up the more they use their credit cards! The credit card companies are out there to make 27.7 percent interest off the poor immigrant who has just arrived in this country.
Lenders are masters at slamming consumers with compound interest rates, being the interest calculated on both the initial principal and the accumulated interest from previous periods. Interest added to interest is how lenders make lots of money, especially off the poor and working class.
This is why I strongly encourage people to pay a little more extra money towards the principal on their home mortgage and credit card balances every month. This small sacrifice can save thousands of dollars and allow you to pay off your home mortgage and credit card debt in a lot less time. Stay blessed!
Disclaimer
The views, thoughts, and opinions expressed in this article are my own and do not represent the opinions of any entity with which I have been, am now, or will be affiliated. Further, I make no warranty regarding the accuracy or effectiveness of my recommendations, and readers are advised to consult other advisors as well as their own judgments in making business decisions.
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