Lenders frequently have customers that request favorable terms. Banks and other lenders are not surprised when they encounter borrowers who request better terms or the best terms possible. Borrowers should request, not demand better terms and rates. Borrowers should negotiate rather than demand certain rates and terms.
If the borrower has trouble repaying the loan, it is better to negotiate restructured repayment. Giving the lender an ultimatum and demanding they accept what you want to pay is often not effective. Sometimes borrowers overstep their bounds and hurt their request by approaching lenders with a list of requirements or demands they feel they have to receive with their loan. This is not a good approach to take with lenders. Borrowers sometimes make the mistake of believing they are entitled to a loan and entitled to whatever terms they feel they should receive.
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Borrowers often do this with the rate, closing costs and the number of months the loan can be approved for. This happens more often with personal loans, but it also happens with business loan requests.
Applicants will often tell the lender in advance that they will not pay above a certain rate, or will even tell the lender the rate that they want to pay. They will also tell the lender that they do not want to pay any closing costs, even though 1 or 2 payments at closing may be a normal requirement. Applicants may also tell the lender the term they want, 48 or 60 months. In some cases the maximum term the lender will consider is 36 months.
When borrowers do this, they may be hurting their chances of even getting the loan approved. If a borrower tells the lender they will only pay a 7% maximum interest rate on a business loan, and the typical rate is 9%, the lender may not be motivated to offer the loan. The lender may do nothing at that point and the borrower will have to decide if they want to go back on their demand.
The same thing applies to closing costs and terms. If 1 or 2 payments at closing are normal and the lender does not concede on this, the borrower may be stuck. Borrowers need to be cautious about how they present their requests. If a borrower says they do not want to pay 1 or 2 payments at closing, the lender may take a closer look at the borrower to make sure this request is just a preference by the borrower, rather than a cash flow problem.
Borrowers with good credit sometimes incorrectly believe their profile is the best the lender sees. Often, a borrower that believes their credit is among the best is really an average to good credit compared to the lenders overall customers. If an applicant makes several demands and is difficult to deal with during the application process, this may be considered a red flag to the Lender. The lender will quickly realize if the borrower is difficult to deal with during the application phase, they may be difficult to deal with as a customer and will almost certainly be hard to deal with if there are problems later.
Due to the reasons cited above, borrowers will get the best results by negotiating with lenders rather than make demands of them.