Most people have debt and most people also use credit. It’s just a reality of being an adult in the modern world. The aim, of course, is to borrow and spend responsibly so as not to default on loans or build up so much debt that creditors begin to come after you.
There are a variety of different loans you may need to repay. WesterShamrock.com outlines emergency expense loans that require fixed installment payments. Other lenders may have entirely different terms, conditions, and requirements.
Regardless of your credit situation or how much money you owe, it’s important to be organized, diligent, and assertive with creditors and lenders and build a harmonious, trusting relationship with your creditors. No, you don’t need to take them out to lunch and buy them flowers, but you do need to make the right moves at the right time.
The following are tips for how to negotiate your financial relationship with creditors and lenders:
Go through creditors, not debt collectors
Once debt collectors are after you, you’ve already mucked up the situation. Your best path forward when dealing with a debt or struggling to repay a loan is to immediately work with your creditor or lender and try and work out an agreement.
Even a small default or a fraction of a defaulted loan can get your account sent to collections, which is bad for your credit and only further complicates your financial situation. Working with creditors before your name gets sent to a third-party collector will usually ensure your credit score doesn’t get hit too hard.
Be diligent by asking questions and taking notes
This should be a common-sense reaction to any serious financial situation. When dealing with creditors or repaying a loan, you need to stay on top of the details and understand the terms and conditions. This means asking a lot of questions, taking copious detailed notes, and continually checking in on your account.
Not only does this behavior ensure you don’t forget any payments, it makes you look better in the eyes of the creditor. Remember, during these negotiations, they’re judging you and gauging the level of financial risk you represent to them. You need to make a good impression from day one.
Get it in writing and save all financial documents or paperwork
There’s no such thing as a handshake deal in the lender/borrower relationship. Or at least there shouldn’t be. Any major transaction – even with a friend – should have paperwork drawn up.
With a major creditor, it’s a necessity to make sure you get everything in writing so that later they can’t change the terms without you noticing. And whether it’s tax forms, lender information, or bank statements, once paperwork is sent to you in the mail, you should always keep it.
That’s where being diligent comes back into play: if your creditors raised your interest rate, would you even notice?
Be consistent with your needs and narrative
The basic gist of this tip is simple and pretty intuitive: do not lie and make up complicated yarns to justify your debt or reasons for borrowing. First of all, remembering the truth is just easier than remembering a lie. If a creditor catches you in a lie (for example, saying you had a death in the family to pull at their heartstrings), they are unlikely to trust you in the future.
Also, don’t change the amount you need to borrow either. Doing so makes it seem like you’re still out there making a desperate financial situation worse. Stick to your guns on your story and your request.
If the damage is bad, consider getting professional/legal help
If things get too messy, you may need a credit counseling agency or even a bankruptcy lawyer to help you. This is usually for cases of large debt defaults that may require consolidated loans or even unpaid business investments that necessitate filing for bankruptcy.