How to negotiate credit after you have prepared for it.
I believe that preppers usually understand the burden of debt in an uncertain world.
It is like having a chain around your neck and being restrained by it. I like to be free.
Negotiate credit only if it is truly warranted and after you have prepared to become responsible for credit.
That is what the 6-month test loan payment is really about. You have allowed yourself the time to determine if what you want to buy is really all that urgent. Is it? You have just waited six months for it. So we can rule out urgency.
You also now know what it is like to live without access to that money in your budget.
If you missed or were late “paying” the test loan payment into the savings account or dipped into those savings for any reason, you need to stop and take a long, hard look at what happened. Be absolutely honest with yourself.
The principle behind having a driver or hunting license is no different from the one that applies to credit. These credentials come with responsibility and they are a privilege to have and not a right to have. Someone is trusting you to repay what you have borrowed.
Lenders are all smiles when you sign on the dotted line. Watch those smiles evaporate if you break the terms of the loan contract. Once you actually borrow money, there are consequences for late or missed payments. If you default, the stakes get higher and I will discuss that in a future thread.
You are also six months longer on your job and living at your residence which goes toward stability that is considered by the lender and as part of your credit bureau. Always consider job stability before applying for credit.
If in a relationship, make sure you can handle it alone.
You should have a least one performance review under your belt before applying for any kind of credit. You need to know if you are making the grade with the employer. If the job market is poor, wait. You need to be able to get another job quickly if you lose the current one.
Now, let’s look at what to do if you decide to borrow money.
First, do your research. Get a copy of your credit bureau and look at your credit score and credit rating.
I will address credit bureaus in the next thread as there are a lot of moving parts to finance issues and I want to address them in an organized way to keep everything clear.
Examine your credit bureau carefully for any errors. This is important. If you see anything wrong, get it corrected before you apply for credit.
I can’t stress this enough: Do not ever go to high interest lenders or payday loan companies. Their interest rates are like a bad current that will drag you under and drown you so fast you won’t know what hit you.
Whatever it is that you want to buy, it is never worth making a bad financial decision or deal.
Once you have verified your credit bureau information, now you can begin to research loan rates.
If you are an established customer in good standing with a bank, start there if you are satisfied with your business relationship with them.
Most of the main banks keep similar rates, but it is still worthwhile to check across the board and know what range of interest rates you can expect to be offered.
Include the terms, or length of time given to repay the loan in your interest research. How will that effect your interest rate?
Once you have finished that, then and only then make an appointment with a lender.
Before you walk into that appointment, ensure you have had a good night’s sleep the night before and a good breakfast.
Never walk into a bank reeking of any intoxicant. The stale odor of it wafting out of your pores or off of your clothing from the night isn’t appropriate for a business meeting. Also, many people find the smell of cigarette smoke or strong perfumes or aftershaves an irritant. You would be surprised at how many people forget that one.
Be clean and well groomed and dress for business.
Remember this: you are attending a business meeting not a job interview.
You have prepared. You know the deal you want and you know your worth. If you are offered an interest rate or terms that are not part of your sensible financial plan, then tell the lender “I’m sorry, but that doesn’t work for me. This is what will work for me and my financial goals. How can we get there?” Negotiate.
Find out if there are penalties if you wish to make additional payments or pay the balance in full sooner than the end of term.
Never guarantee a loan by over pledging chattel or security. If you have stability, six months of payments in savings, and a good credit bureau, you shouldn’t have to pledge everything you own to get a loan.
If you are uncertain about their offer and wish to seek independent advice, then tell the lender that you want to think it over and make another appointment for a later date.
Loans officers are used to people entering their office, hat in hand, as if they are applying for a job and willing to take or sign anything.
Getting a loan is not about winning a prize. It is a business deal.
Once you have made an agreement, then read and understand every single line of that loan document before you sign it.
Never sign your name or agree to anything that you have not read and fully understood including online. Usually, a legal document will state in the wording that your signature is affixed because “I __________ have fully read and understood….”
If someone tries to rush you, politely indicate that this is business and you are ensuring everything is accurate and to your satisfaction. You don’t need to apologize for being sensible.
I have caught errors in estate and mortgage documents made by a lawyer and banker respectively. They are human and capable of errors in person or online.
Make sure you fully understand and confirm the date of the first payment, the amount and how the payments are taken from your account should the payment date fall upon a weekend or holiday.
Edited to add: Remember when you apply for credit it is also a sales situation. The lender will try to sell you more products or services. It is how they get promoted. They have quotas to meet just like a bank account manager, teller or customer service rep.
For example, you want a mortgage and walk out with a line of credit and a credit card. Or, you want x amount of money for a loan and walk out with more money than you asked for because “you qualified for it.” Do not fall for that. It’s not a popularity contest or an award. They are trying to sell you something – more debt.
Stick to your preparations and plan.
That’s all I can think of for now. Next, credit bureaus.