I previously outlined how a borrowing relationship is like a marriage and adapted keys from Dr. Emerson Eggerichs’ book, Love & Respect: The Love She Most Desires; The Respect He Desperately Needs. Let’s look at cultivating understanding and brokering peace.
- Cultivate Mutual Understanding: The borrower can enhance the relationship by understanding the perspective of the lender during negotiation. For example, your loan might require higher reserves due to bank regulatory requirements. The higher reserves cut into the bank’s profit margin. To compensate for a lower profit margin, the bank may ask for a higher interest rate or fee structure. A borrower’s demand for market pricing on a non-standard loan could frustrate the negotiation and create unrealistic expectations. Your body language can also influence mutual understanding during the loan negotiation as explained in this excellent article in Forbes.
- Broker Peace: Be careful about drawing battle lines too quickly. My experience is that the borrowing and lending relationship thrives on diplomacy and tact. If positions get hardened too quickly, the possibility of reaching a mutually agreeable solution is diminished. Remember, a good agreement is one in which neither side gets everything they want and feels they left something on the table. If one side believes they got an unfair deal, the chances for an escalating dispute or deal fracture later are greatly increased.
Cultivating understanding and brokering peace are essential for a productive borrowing relationship. Next post we’ll take a closer look at loyalty and promoting your banker.