Interest on non-government student loans varies per lender. Since these private financial institutions are competing to provide you their loan services, more often than, not they are willing to charge lower interest rates than the ones they initially advertise or offer you. However, this depends on how you negotiate with them. Here are some tips you can apply when negotiating for lower interest rates on your student loan:
Have a good credit rating
When you enter into any negotiation, the most basic rule is to have the upper hand. In negotiating for a lower interest for a student loan, having a good credit rating will significantly increase the chances of the bank or lender meeting your requests. Your credit rating will indicate to them that you are not much of a risk, thus, can be charged with lower interest rates.
Be a good borrower
Show that you take ownership of your loans and finances by being in contact with the lender, especially when they needed to be informed of changes in your personal or contact details. Make your payments on time and inform them in case you will be late in your payments on a certain month. Lenders don’t award low interest rates arbitrarily. Good borrower behavior such as the ones mentioned here is often their basis in granting a request for a lower interest rate.
Negotiate for a fixed interest rate
Try to negotiate for a fixed interest rate that will be applied for the entire duration of the loan. Having a fixed rate will protect you against fluctuating market changes and make it easier for you to prepare your budget.
Negotiate for other goodies
Also negotiate for other goodies such as waived processing fee, finance charges, late penalty charges, and other costs associated to your loan. If the lender will grant only a part of the interest rate that you initially requested for, you can still save some money if they waive these associated loan costs.
Don’t bluff or threaten
Losing your cool in any negotiation is a big no-no. Banks and lenders deal with a lot of clients asking for the same thing every day. They can easily smell a bluff. Threatening them will just be as counterproductive.