How to Negotiate Rates

Negotiating for better interest rates is easier if you know what you need.

Banks compete hard for customers and many are willing to offer competitive interest rates on their products as a part of their customer acquisition strategy. Negotiation is part art and part science but the process is easier when you know the right questions to ask and the best people with whom to talk. The process is more effective if you do a certain amount of preparation beforehand. It's also important to remember that banks are required to give potential customers full disclosure about their products whenever questions are asked.

Instructions

1. Do your homework about available products before contacting a bank. Knowing your available choices before you begin the negotiation process helps you make better decisions on quick notice. It also allows you to be a better judge of what's a good deal and what is not.

2. Obtain accurate information about any fees associated with a product. The Fair Credit Reporting Act requires lenders to give complete disclosure about the costs of a product when asked. When you are comparing products, make sure to build fees into your budget. This allows you to make more accurate comparisons, and fees can often be reduced.

3. Talk to employees in person. Sometimes managers or loan officers will make discretionary offers to customers based on circumstances. This can be true for depository as well as lending products. In its mortgage shopping guide, the Federal Reserve explains that many loan officers have a pool of money they got for a commission that they can share with customers if they choose to do so.

4. Walk away from an offer if it's not to your liking. There's an old adage that says when it comes to negotiating "He who cares the least, wins." If an offer doesn't feel right, don't be afraid to walk away. The Federal Reserve sums up its mortgage shopping strategy in three words: "shop, compare, negotiate."

5. Ask for the good deal. This advice seems straight forward, but many forget to do it. BankRate's Brad Dakake of the Massachusetts Public Research Interest group says that "There's no incentive for them to lower your rate unless you call. The squeaky wheel gets the oil."

References

• BankRate: Want A Better Credit Card Rate? Just Ask; Lucy Lazarony
• The Federal Reserve Board: Looking For The Best Mortgage
• Federal Trade Commissions: Fair Credit Reporting Act