Negotiating Interest Rates With Credit Unions
- 1). Print out your credit report from all three major credit reporting agencies, which include Experian, TransUnion and Equifax. You may obtain your reports by visiting each bureau and ordering a report or by visiting AnnualCreditReport.com and obtaining each report for free. You may obtain reports through the AnnualCreditReport website only once per year.
- 2). Determine the average interest rates for the type of loan you’re seeking. Certain websites, such as Bankrate and HSH, specialize in daily, weekly and monthly interest rates.
- 3). Visit your credit union in person. Dress in professional attire, such as a dress shirt and pressed pants. By presenting yourself professionally, you start the meeting by giving a favorable impression.
- 4). Explain that you’re looking for a loan. Explain what the loan is for and how much you wish to borrow. Tell the credit union employee you want to find out the interest rates you can expect to be offered.
- 5). Fill out necessary paperwork for the loan. Once your information has been processed, which may take one business day, the credit union will inform you of your interest rate if you were approved and if you accept the loan.
- 6). Present your credit reports if you wish to negotiate the interest rate offered. Point out your strong credit history. If you have recorded late payments, avoid mentioning them; highlight the strong points only. If you were offered an average or higher than average interest rate and your credit rating is high -- a credit score above 700 is considered good, according to the Experian website -- explain that you believe the interest rate is inappropriate given the current interest rates and your credit score. Present the interest rate data you printed out.
- 7). Present your history with the credit union, if you have any. Talk about your accounts in good standing and repaid loans. If you don’t have a history with the credit union, explain your previous loans or lines of credit you have paid back fully. Make it a point to reassure the credit union representative with whom you are speaking that you will repay money that you are loaned. You want to show that you’re not a credit risk and you deserve a lower interest rate.
- 8). Threaten to go to other financial institutions. If the credit union explains it cannot give you a lower rate, simply say, "I'll have to take out the loan elsewhere." By explaining that the credit union will not get your business unless it lowers the interest rate on your loan, you're effectively taking money away from them. This strategy may not always work, but, in some instances, it's worth a try.
- 9). Ask whether the addition of a cosigner would help reduce your rate. If you have poor or no credit history, credit unions may refuse to lower your rate, because you haven't proved to be a trustworthy borrower. A cosigner with a strong credit rating can sometimes help you qualify for a better rate, because the cosigner's signature guarantees that he will repay the loan if you cannot.
- 10
Offer collateral for the loan. Collateral is any asset of value you pledge to secure a loan. Callateral serves as a way for the credit union to recoup its money in case you default on the loan. Whatever you offer as collateral, such as your house or a car, you stand to lose to the lender if you cannot repay the loan. Providing collateral reduces the risk the credit union inherits, which may prompt the credit union to reduce your interest rate.
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