Isn’t it great to score a lucrative deal while making a purchase, however big or small it may be? After all, who doesn’t love a good bargain! Taking a loan is quite similar, except that instead of a cash discount, you can get the interest rate slashed and save good money in the long run.
A majority of customers think that the interest rate on their home, personal or auto loan is not dynamic and thus, cannot be lowered. However, it is possible to negotiate a better deal with your bank since there is always scope for a little haggling in a buyers’ market.
Here are a few ways to get a better interest rate deal when applying for a new loan:
Maintain a healthy credit history
Nothing will get you in the good books of lenders if your credit history is bad. Mounting debts, unpaid dues, not clearing the outstanding amount on time, etc., can greatly affect your credit score and make lenders think twice before offering you a loan, let alone lowering the interest rate. On the other hand, borrowers with a good credit score find no difficulties in getting their loans approved and can even cite their good record to negotiate a lower interest rate.
: Have you been checking your credit score lately? Remember to access your credit reports periodically to analyze your creditworthiness and see if any course correction is required on your part.
[Related: Another Rate Hike: Should You Cheer or Worry?]
Reap the rewards of your loyalty
If you are seeking a loan from the same bank where you have had a savings or checking account for years, you can leverage this relationship to negotiate a lower interest rate. Moreover, if you have borrowed from the bank in the past and repaid the amount successfully, the lender will have a first-hand experience of your creditworthiness and that can boost your chances of getting an interest rate benefit.
Schedule a personal meeting with the bank representative
A one-on-one interaction is always more effective than communicating over the phone or via mail and will help you make a better impression on the lender. Try to organize a personal meeting with your bank’s representative and put your haggling skills to use.
Take advantage of corporate deals
Banks extend exclusive benefits to employees of companies they have ties with. If your organization has partnered up with any leading bank, it is worth checking if you are eligible for a lower interest rate as part of a corporate deal.
Scout the market before haggling with lenders
Whether you are a new or an existing borrower, it does not hurt to take your chances with some haggling. If you are applying for a loan at a major bank, ask them to beat what other major lenders in the market are offering. You can always compare personal loan rates on sites like Souqalmal.com and try to negotiate a better deal with your existing lender by pointing out lower-cost alternatives.
[Related: 6 tips for getting your personal loan application approved]
Tout your financial strength and stability
Showing that you have a stable job and a progressing career graph will prove that you are financially stable and allay any fears regarding your ability to repay. Plus, it puts you in a good position to strike a better deal since banks look to retain customers who are financially healthy.
Look for salary transfer deals
Customers who are willing to transfer their salaries to another lender could be eligible for exclusive deals linked to personal or auto loans offered by the new lender. For instance, you can avail a cashback of up to AED 2,500 on home loans if you transfer your current account to HSBC or recently, Emirates NBD ran a promotion wherein lucky customers could win back 3 EMIs of their personal or auto loans as part of their salary transfer offer. Look out for such deals to see if you can bag a lucrative loan offer upon switching.