Focusing Just On Rate Could Cost You Big Time

An underrated component of lender selection is understanding how your proposed lender does business.

I mean really does business, beyond the marketing and advertised rates.

Here’s a scenario a client once brought to me:

A business approached me to help them negotiate to get out of a contract with a business lender.

The contract, an extension to an already expired term, had been ‘secured’ when the lender asked the business to sign an undated blank document with the instructions “sign this to keep your rate the same” and the lender filled the rest out after without giving the business a copy.

6 months later the credit facility wasn’t working for the client and they looked to move to another lender – this is when they realised the lender considered them to have agreed to a contract extension.

The lender demanded over $100,000 in exit fees made up of supposedly lost interest and other costs (there was nothing in the lender’s original contract terms supporting this approach if there was a genuine reason to end the contract term).

The lenders response when the customer stated they didn’t know they were being recontracted?

“We’re not negotiating.”

How to avoid choosing the wrong lender

Obviously, the example above is extreme but beyond the interest rate it’s important to know how your lender approaches queries, requests for help, misunderstandings and problems should they arise.

Are they going to look to give an exiting customer a good experience knowing they might be a good fit again if circumstances change in the future, or are they going to try and make as much as they can in the moment?

A good lender will work with you collaboratively and transparently to solve challenges in a timely manner with justification for the outcome.

Some questions to know the answers to

Is the lender you have selected fair and reasonable with fees and charges?

Are they transparent and do they go out of their way to make sure you understand what you’re agreeing to?

Does your lender have a known track record for fairness and care about their customers?

Final Tips

The right business lender should enable you to make your circumstances better.

Apart from your levels of satisfaction (which are really important!) picking the right lending partner can save you thousands and allow you to focus on the really important stuff.

You.

P.S. Here’s a list of some of the solutions we’re doing for clients at the moment.  

• $350k no doc loan for extensive renovations which a business used to prepare a property for sale
• $1.8M no doc loan to buy out a business partner during a restructure
• $2.8M low doc loan with repayments against farm land while a rezoning application is processed
• $650k no doc loan with no repayments for 12 months to cash flow a startup business
• $500k trade finance line of credit to a civil construction firm to extend supplier credit terms

Get in touch to talk through your situation.

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