Negotiate Your Loans and Save Big Bucks

Wise Loan Editorial Team
By: Wise Loan Editorial Team
a piggy bank sits next to blocks with the word “save” spelled out to show ways to build credit without spending money

Who Doesn’t Love A Good Bargain?

The allure of a great bargain has captivated many, with modern shoppers embracing the thrill of discovering incredible deals, reminiscent of the pride our grandparents once felt. Nowadays, discounted-goods outlets, as well as the growing popularity of thrift, vintage, and resale stores, have made it easier for almost everyone to enjoy the satisfaction of a good deal. Those familiar with haggling and auctions know the exhilaration that comes from being assertive in their shopping habits and uncovering amazing finds.

However, when it comes to loan shopping, many of us seem to lack the same assertiveness. While some people might be assertive in certain aspects of their loan shopping, they often miss the mark in the crucial areas. David Osborn and Paul Morris, authors of the best-selling book “Wealth Can’t Wait,” shed light on an interesting observation. They point out that while people may negotiate the price of the house they intend to buy, they rarely consider negotiating with their lender.

According to them, even negotiating down just one-eighth of an interest-rate percentage point, if lived in the house for 30 years, could lead to savings of $50,000. Osborn and Morris advocate for applying the same negotiating zeal to the loan as they would to the house’s price.

Miron Lulic, the founder and CEO of SuperMoney, a financial-services platform, emphasizes that few people negotiate their car loans either. Surprisingly, while 76% of buyers negotiate the price of the car itself, only 31% negotiate the terms of the loan. Dealers are well aware that buyers tend to focus on the monthly payment rather than the overall cost of ownership. Consequently, the finance office can obscure mounting payments from prospective buyers, unless they are vigilant and attentive.

To save money on any loan, be it for a home, car, or personal use, the first step is to shop around and explore different lenders. Experts like Greg McBride, the chief financial analyst at Bankrate, suggest applying with at least two different lenders. This approach not only helps in identifying the best deal but also provides leverage in negotiating favorable rates and fees.

McBride further advises that applying to multiple lenders on the same day does not significantly impact credit scores. Multiple inquiries made within a thirty-day period are generally treated as a single inquiry.

For those seeking home loans or mortgages, it’s essential to be wary of so-called “junk fees.” Morris and Osborn highlight specific examples like high processing fees or delivery charges, which might be unreasonable. For instance, a $100 processing fee might be justified, but $1000 would be excessive.

Additionally, Osborn warns savvy consumers to be cautious if a mortgage lender claims to have no closing costs or surprisingly low closing costs. Often, such lenders might compensate for these offers by charging higher interest rates.

Negotiate Your Loans and Save Big Bucks

For auto buyers, it’s crucial to recognize that the average new-car loan term now stretches close to six years (70 months). As a recommendation, Lulic suggests exploring the option of refinancing an expensive car loan after a few years. Doing so can lead to substantial savings and might even result in shortening the loan duration.

In conclusion, there’s no harm in negotiating for lower interest rates and better terms, especially since credit is a necessity in the modern age. While credit is vital, it’s essential to be prudent and avoid financial strain. Be wise, be shrewd, and assert your right to affordable and reasonable loan terms.

The recommendations contained in this article are designed for informational purposes only.  Essential Lending DBA Wise Loan does not guarantee the accuracy of the information provided in this article; is not responsible for any errors, omissions, or misrepresentations; and is not responsible for the consequences of any decisions or actions taken as a result of the information provided above.


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About the Author

Wise Loan Editorial Team

Wise Loan Editorial Team

Introducing the Wise Loan Editorial Team – a collective of experienced finance and credit professionals dedicated to enhancing your financial path. Our team boasts over three decades of expertise in the finance sector, united in our commitment to deliver reliable and practical financial insights. True to the Wise Loan ethos, our goal is to positively impact the financial well-being of our customers.

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