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In any business arrangement there are two opposing motivating forces: the buyer wants to pay as little as possible for the goods or service, and the seller wants to maximise his profits. The idea of bartering is so entrenched in many cultures that it seems almost impolite to pay the asking price. Yet someone who was asking for a hundred pounds for something will quite often accept seventy, and still make a healthy profit. The reason? Because they want to maximise their profits but know that there will always be someone round the corner who will undercut them if they keep their prices too high.
So when we're shopping around for a loan, are we in a position to haggle? Generally speaking, no. The rates at which loans are put on the market are the result of boardroom calculations, shareholder expectations, base interest rates and many other factors. But what you can do, and what a surprisingly small number of borrowers do, is take your business elsewhere. Nowadays, the better deals aren't round the corner, they're simply on a different website. Anyone with a few minutes to spare can not only examine a lender's rates and deals, but also compare them to the competition.
You can either do it yourself by using search engines and link pages, or you can enter the details of the loan you want into a comparison site and get yourself informed of the deals you'd never have thought about looking for. What you'll inevitably find is that some lenders are trying to maximise their profits at your expense for essentially the same article – a loan. When you're dealing with cash, it's difficult to claim that one loan is better quality, so it's impossible to justify higher rates. There are no thoroughbred loans or Ming loans or aged 40 years loans, just loans with low rates and loans with high rates.
In other words, do you want to minimise your costs or maximise your lender's profits? Whether you play the lenders' game or play by your own rules is entirely up to you.