Tips for negotiating your student loan with lenders
Updated on July 21, 2020
Where the negotiation of interest rates on student loans is concerned, lenders usually hold most of the power. Borrowers with existing loans have already signed a contract, so the lender has little cause to cut the borrower any slack. Borrowers who are looking for student loans don’t have a lot of room to negotiate either. It is important to determine when borrowers can have leverage and how to use that leverage to their advantage.
Sometimes the terms of a student loan agreement can be swayed. If the lender is convinced that the borrower might go elsewhere, they are more likely to negotiate. The best leverage a borrower can have is to have an offer from another lender. This works for borrowers looking for private loans, or those looking to refinance existing loans. Lenders are more likely to match another offer when the borrower has another contract drawn up and ready to be signed.
Refinancing is a strong option for borrowers rather than negotiating a new deal. Borrowers who are struggling to repay their loans will have some leverage. If the lender thinks that the borrower may default their loans, they’ll be more likely to reduce interest rates or extend the loan terms.
When trying to negotiate loan terms, it often helps to speak with someone in authority rather than a customer service representative. CSRs usually can change interest rates on existing loans without approval. Be able to provide a specific amount that you are willing or able to pay. This can help the negotiation run more smoothly.
Be cautious if they offer a deferment or forbearance. This could make things worse. Your balance will acclimate, and even though you’ll get a temporary break, you’ll be paying on the loan longer than you intended to. The best thing is to come up with a realistic plan that leads to the loan being paid. And remember, if you don’t succeed the first time, don’t give up. It may take a couple of negotiations before you are able to work out a compromise.
For more information about student loans, including refinancing and repayment options including contact StudentLoanify today.