Some creditors have already set up relief programs – you may just have to request help
For those looking to reduce expenses in the current downturn, renegotiating your bills is one way to do that.
Right now, most creditors are expecting your call and many are willing to work with you. Some have already put in place relief programs – you may just have to ask.
Here are some things to keep in mind going into these financial negotiations.
Before calling a lender, review your financial situation, the terms of your account and what competitors are offering in terms of interest rates or relief, says Bruce McClary, vice president of communications for the National Foundation for Credit Counselling. Look up any unfamiliar terminology.
Script a few bullet points of what you would like to say so you can keep the conversation professional. For example, you could state that you lost your job due to the coronavirus and that you would like to work something out with them so they can get some of their money.
Then ask for how they might help, be silent and let them make an offer he says.
Don’t necessarily take the first offer. Politely ask what else is available as you may then get a more favorable deal.
What if the customer service representative isn’t helpful?
If your first call isn’t successful, call back on a different day as you may have more success with a different representative, says Mr. McClary.
The creditor’s goal is to get paid and to keep you as a customer. Ask to speak with the customer loyalty department or a manager. Inquire what discounts and promotions are available and what else they have offered other customers.
While it is frustrating to wait on hold and difficult to recount your situation to a stranger, losing your cool with a representative rarely leads to a more favorable outcome, says Ed Brodow, a negotiation expert and author of “Negotiation Boot Camp: How to Resolve Conflict, Satisfy Customers, and Make Better Deals.” Try to stay calm, and they’ll likely be more motivated to help you.
If you can, make your request through the lender’s website or mobile app to save some time and frustration.
What risks should I consider when negotiating?
Common trade-offs include negative information added to your credit report, higher interest costs in the long run and increasing the time it will take to pay off your debt, says Sophie Raseman, head of financial solutions at Brightside, a company that provides financial guidance to workers.
Ask up front how your relief option will be reflected on your credit report. Watch out for surprise payments, such as a large lump sum that is due on a specific date. Instead, ask to pay in even installments, she says. Get whatever you agree to in writing.
Beware of scams. If you receive an inbound call supposedly from your servicer, ask to call back at the toll free number on their public website, Ms. Raseman says.
How should I approach my landlord?
Landlords want to keep their building full and cash flow steady. And since they typically know how long and difficult ti can be to take someone to court to collect overdue rent even when the economy is good, renters may have more leverage than they realize.
Offer a deal that is mutually agreeable for the landlord. For example, you might ask for a 30% rend reduction for 3 months and in turn, offer to extend your lease, says Alexandra Carter, a Columbia Law School professor and author of “Ask for More: 10 Questions to Negotiate Anything.”
If your landlord doesn’t agree to your initial offer, you might be able to negotiate something else such as free utilities or parking, Prof. Carter says.
What do I say to my credit-card company if I am having financial difficulties?
Begin by briefly explaining your circumstances and what you’re looking for. For example, if you’ve lost your job due to the economic shutdown, tell them your situation. Remind them if you’ve been a good longstanding customer who always pays on time, but you’re going through a temporary rough patch.
Then, ask if it possible to skip this month’s payment without interest being added (also known as a deferment), says Ted Rossman, industry analyst, CreditCards.com.
Some companies have already established relief programs. For example, Apple Card is allowing customers, upon request, to skip March and April payments without additional interest. Do some research to see if your company is offering relief to other customers.
Lender-approved payment modifications shouldn’t hurt your credit score, but clarify and document this, he says.
Besides skipping a payment without interest, you could also ask to skip a payment with interest still accruing (also known as forbearance), getting other fees (such as a late fee or an annual fee) waived or get a lower interest rate.
“The bottom line is that it can’t hurt to ask,” he says.
How can I get help with my car loan?
Many lenders are offering auto relief programs to help customers alleviate some of their financial burden, such as deferred payments, waived late fees or loan extensions in response to coronavirus, says Rory Joyce, head of auto at Credit Karma.
Most lenders have outlines of options, potential requirements (i.e. if you need to show proof of job loss) or the best way to get in touch on their websites. Others will just direct you to call, as they handle relief agreements on a case-by-case basis.
When you get in touch with your lender, explain your situation. If you’re asking for a loan deferment, make sure you’re clear on the terms and conditions. It is common that interest will likely accrue during the deferral period. Confirm with your lender what that interest amount will be, so you know what you will owe, and get the agreement in writing.
Another option to consider is refinancing your auto loan, taking advantage of low rates, says Mr. Joyce. It’s also worth considering extending your loan term, which then allows you to make smaller monthly payments.
What if I can’t pay my medical bills?
If you can, inform your provider of your financial situation before treatment, this could help you negotiate a smaller bill.
Don’t pay any medical bill until you receive an explanation of benefits (EOB) from your insurance company, says Caitlin Donovan, spokeswoman for Patient Advocate Foundation, a nonprofit billing advocate.
It is especially important for now for patients for their EOB as their provider’s office may not be aware of what insurance companies are covering related to the coronavirus, she says.
When you do get the explanation of benefits, try to get your insurance company to cover more of your costs.
You can work with your Insurer and your provider to try to prove, for instance, that an out-of-network provider was your only option or that you weren’t given a choice. If this is the case, you can ask your insurer to cover your provider at the in-network rate.
Don’t assume the amount you owe the medical provider is non-negotiable, she says. If you can’t pay because you lost your job, call your provider’s billing office to see if they can lower the total amount due, accept the Medicare rate or work out a payment plan.