This post contains affiliate links. For more info on our relationship with affiliates click here.
Haggling – isn’t that something they do in markets in the Middle East? Shouldn’t you only do it when you want a new car?
There are certain times when even us Americans will haggle like a pro. That’s because, for some reason, it’s okay to start negotiating with a car salesman. At a dealership, their rates are never set in stone. Well, the same goes for debts too. Yep, they might seem as if they are as strict as a demon principal but they are surprisingly flexible. Of course, lenders and creditors won’t tell you this yet it’s true nonetheless.
Here’s why haggling makes cents.
Picture this scenario if you will. You borrow money from a lender and don’t pay it back in time. They get sick and tired of your procrastination and go to court. The judge ruled in their favor and you have a court judgment as a black mark on your record. It sounds like no big deal, right? Well, it is when you ask yourself: How long does a judgment stay on your credit report? The answer is seven years and they ruin a person’s credit. Alternatively, you can call a creditor and tell them about your money issues and create a payment plan. Then, there’s no need to involve the law.
The Break Even Theory
Anyone who lends cash has one goal: to break even. Banks might not have this attitude now because they’re making money over fist, but their last resort is not to lose money. This is an important distinction for those in debt as it means creditors are willing to slash interest payments. Granted, you have to be in a dire situation before they start waiving rates yet it has happened before and will again. Tell them that all you can do is cover the original investment and haggle from that position.
No one wants to file for a chapter 7, 11 or 13 yet life happens and there are no other options. If the debt is unsecured, there’s a good chance the court will wipe it away without any questions. So, the lender might lose out depending on the type of loan. Even if you don’t plan on filing, don’t be afraid to use it as leverage. As soon as they realize they could miss out on recouping their investment, they’ll start handing out favorable terms. Sneaky it might be but it’s necessary when the red begins to build up.