money

Hunt for a bargain on financial products

Understanding the underwriting criteria for the lender or the provider can help you negotiate more effectively

13:40 November 11, 2017

In many societies, price haggling is part in life. It could even be part of any shopping experience regardless to what you’re shopping for — a new purse, a car or even a house. Some people are so good at it that they may even be asked to accompany family members or friends when they are making major purchases.

But when it comes to financial products, it is sometimes surprising how people see them as non-negotiable. It could be that money transactions seem to be set in stone or the entire process is intimidating. And yes, in some cases, you won’t be able to change rates or terms. For example, if you are applying for a particular credit card, you will get whatever the assigned rates and fees.

But where you have a lot of wiggle room is to get a financial that fits your requirements upfront — and that is what takes some negotiation skills with the financial services provider. Understanding the underwriting criteria for the lender or the provider can help you negotiate more effectively. For example, instead of saying that you just want a discount, you will be able to make the case for why you deserve a discount.

Here is more information to help you navigate some of these conversations.

Insurance

By definition, insurance covers risks, so if you’re a lower risk you should a lower premium. Right? Now what makes you a lower risk? You don’t have to come up with the answer to this question yourself. Instead find out what insurers look for.

For example, if you’re buying auto insurance, they could be looking at factors such as your age, driving record, type of car, lifestyle, length of commute, etc if you know with certainty that you have some strength points there, use them for leverage.

For example, mention that your commute is pretty short or that during your lengthy driving history, you have never filed a claim. Using these arguments can help you get a discount. Some insurers even offer discounts to certain professions or students.

Similarly, if you’re shopping for life insurance, look for what insurance companies consider. A solid health check-up can go a long way. You also might want to highlight being a non-smoker, or living an overall healthy and safe lifestyle.

Banking products

Credit cards, checking accounts, saving account and all other banking products come in all colours and flavours. Although you won’t be able to get a discount on any of them, you can get a better deal if you qualify for a better product. For example, if you don’t want fees on your checking accounts, you might ask for a payroll account or even a student account, if you’d qualify.

The point is know your priorities and feel confident enough to voice them when you’re applying for any type of financial product. Remember, banks are very competitive, and they do want your business, so ask for the best deal you can get on your banking.

Debt

This is a situation where you actually can ask for a lower rate. That is not an easy conversation, however. But if you’re in a situation where you have accumulated a lot of debt, and it appears to be spiralling out of control, ask your bank on how to restructure this debt at a lower rate. Your willingness to work out a deal ahead of defaulting could be appreciated by your bank. In some cases, you might be able to get your credit card debt consolidated and spread over a longer repayment term at a lower rate.

If your bank is unresponsive to your requests, shop around. You may be able to get another bank to consolidate your debt — in which case, you debt will be paid off and you will have to pay back to the consolidating lender.

Knowing that you have options can help you save money. You always can just ask for discount, but when your request is supported with a solid argument, your chances of having your wishes granted are higher.

The writer, a former Gulf News Business Features Editor, is a Seattle-based editor.

It’s negotiable

Know what to negotiate and how

Be confident to voice your priorities

Shop around if your provider is unresponsive

Know and use existing competitive offers

— R.O.