The Right Words: How to Properly Negotiate Your Loan Terms

To be posted on:

Let’s say you are in financial distress. You are stressed about it, and the anxiety of bills piling up is taking a toll on your mental health.  A fast and reasonable way out of the situation is to look for a money lender in Singapore that will give you the funds you need in the quickest way possible. 

If you have the funds to settle your bills and buy your basic needs, you will be able to focus on work and other important things. Your mind will not be burdened by the relentless payment demands from your landlord and utility companies. It will feel like a better life is already within reach once your loan gets approved.

However, you must remember that being in a dire situation is no excuse to be rash. So when you have decided that a loan will be the best way to regain your footing, try to go about it in a way that will benefit you. You can do that by negotiating your loan terms. 

 1. Evaluate your financial situation.

This will help you assess what you need and enable you to look for the product that will fit these needs. As with any big decision, an evaluation of your current situation is crucial so you can find the best way to address your concerns. One cannot come up with a good solution without an understanding of what one is currently facing. 

 Although the truth can be painful, it is best to be honest with yourself. You must know how you got there before you can get out of the financial rabbit hole. Start by listing down your expenses, especially big-ticket items and recurring ones. If you are paying off credit card debt, try to budget for more than the minimum monthly payment. 

 2. Research lenders, loan products and market rates.

Financial institutions have a variety of loan products, and it’s important to know what they are so you can find one that fits your needs. So, do not commit to loan obligations, even in difficult situations, without understanding the product. Do your research and ask if the lender you are eyeing has the personal loan product you need, whether it’s loans for home renovation projects, emergencies, or credit card repayments. 

Once you have decided what product to get, you can inquire about the allowable loan amount. This is usually based on your income and most financial institutions will ask for corresponding documents like tax returns or pay slips. 

3. Lending is a business and you are a client.

Remember that the lender is also interested in booking the loan. At the same time, as a borrower, you are not in an advantageous position, so you cannot afford to make it worse. That is why make a list of licensed lenders, and look up their relevant loan products their prevailing interest rates and charges. 

Before visiting the office of a lending company, familiarize yourself with prevailing interest rates, charges and payment terms in the market. Use knowledge and information to make wise decisions. 

  1. Inquire about the interest rate, applicable fees and penalties.

Keep in mind that unless you are borrowing from your family or friends, lending is a business. It entails costs, and lenders will pass these on to you, the borrower, by imposing interest on your loan. This is a certain percentage of the principal amount that is added to it and you will be paying for this total amount depending on the agreed-upon payment terms. 

Payment terms can either be monthly, quarterly, or the loan amount in full, plus interest, at the end of a certain period. If you pay the loan upfront, some lenders may even charge you a fee because this means they will not be able to collect the loan interest.

There are also processing fees involved so you must expect that the loan amount you paid for will not be given to you in full. Normally, the lender will deduct the fees from the loan amount, or you can also pay the fees upfront. 

Lastly, if you do not pay on time there usually are penalty fees. Ask for the exact penalty amount and the period with which you can pay if you do not do so on the exact due date. This is also the time to ask if there are penalty fees in case the due date falls on a national holiday when banks or other payment channel businesses are closed, and you cannot send your payment to the lender.

Aside from inquiring about these rates, terms, and conditions, it would also help to have the lender put them into writing. That way, you can refer to it when planning and making payments, and in case disputes with the lender arise in the future. 

  1. Know thyself.

What makes you a good borrower? Have you been able to hold on to your job for years now? Do you have a history of paying your debts on time? This can be a good bargaining chip. Of course, the lender will ask for documents as proof. So if you have previously applied for a loan and completed your loan payments, ask for a certificate of completion of payment or any equivalent document.

Also, learn more about your opportunities for added income. Perhaps, you can upskill to acquire skills that can land you in a job with higher pay or which will enable you to have a side gig. Aside from helping you earn more money, you can also use these to get your loans approved easier and negotiate better terms. 

  1. Create a strong credit score.

If you have a good credit history, you are an ideal borrower. Use this to your advantage in negotiating the allowable loan amount, the payment terms, and even the interest rate. 

However, if you are borrowing for the first time, you should know the importance of paying on time and avoiding defaulting on your obligation in the long term. This will affect your future financial transactions. The next time you apply for a loan, the lender will rely on this information before making a decision.

  1. Read the fine print.

Forgetting to read the terms printed in a small font is a common mistake. If you want to avoid this mistake, remember that they might have set the font to the smallest size precisely to discourage you from reading it. These clauses are usually about important added conditions, restrictions, and penalty fees.

  1. Look for people you can consult to understand the loan agreement better.

Ask your family and friends if they have experience in borrowing from lenders. If you have a friend who is a lawyer or one who works in a financial institution, you might want to treat them to coffee so you can go over the loan documents together.

  1. Ask if you can see the lender’s license.

If you are borrowing from a lender who complies with the requirements of the Moneylenders Act, they should not get offended when you request this. Aside from compliance with the law, another reason you should inquire about their license is that there are certain restrictions applicable depending on the lender’s licensing status and terms of their license.

  1. Think about your decision before signing the contract.

For the last time, try to think about other ways you can explore aside from taking out a loan. This is important especially if you are applying for a loan with collateral. If you have other options like borrowing from family members or friends, you might want to think about choosing that option.


We cannot discount how having additional funds can help you in a dire situation. If you have not paid your financial obligations for more than a month, you can use the loan proceeds to keep problems at bay. However, blindly agreeing to the terms of the loan is a big no-no. Instead, understand how lending works as a business and the terms of your loan so you can negotiate better. 

Also, do not hesitate to ask questions that will help you understand the loan product. As they say, it’s better to be safe than sorry. Lastly, be on the lookout for lenders who will pressure you into signing documents and accepting the funds without first explaining the terms to you.