A credit union loan officer often is willing to negotiate a loan interest rate to prevent a borrower from going to a bank for financing. To get a lower interest rate the borrower must make the loan officer comfortable with the loan request. There are many ways to accomplish this, such as having a cosigner on the loan or using an asset as security.
Unsecured vs. Secured
Most credit unions charge a higher interest rate for an unsecured loan because of the higher risk. You can almost always get a lower interest rate when you secure the loan with your property, such as a car or other asset you own free and clear. If you have an asset to secure the loan, simply let the credit union officer know when you apply. You then can begin to negotiate once you find out the initial interest rate offer.
Research Area Interest Rates
Check online to see if local interest rates are available for the type of loan you need. For example, if you are going to buy a new car, use a search engine to find the website of a local bank. Go to the website and write down the car loan interest rate you find. If you are unable to locate the information online, call the bank and speak with a loan officer to find out the rate. You will use this information to help negotiate a lower interest rate with the credit union.
Start Negotiating
Contact the credit union loan officer and find out what the current interest rate is for the loan you need. If the credit union interest rate is higher than the local bank rate, tell the loan officer that you have done some research and you can get a better rate at a bank. If the loan officer wants your business, he will have to beat or at least match the bank's interest rate. Tell the truth when you discuss the bank's rate, since the credit union loan officer will find out if you are not being honest. Apply for the loan if you reach an agreement on the interest rate with the loan officer.
Continue Negotiating
If the credit union loan officer will not lower the interest rate to match the bank there are other strategies to try. Ask the loan officer if you can get a lower rate by allowing the credit union to automatically take the loan payment out of your checking account each month. You can also offer to move a savings account over to the credit union if the loan officer will give you a lower interest rate on your loan. If you have little to no credit, ask the loan officer if using a cosigner will help you get a lower rate. Try using a combination of the above to get the lowest possible interest rate on your loan.
