Negotiating will almost always get you a cheaper loan. But the overwhelming majority of borrowers never try to negotiate. They assume it's not possible.

"Yes, we can negotiate," says Sidney Lenz, executive vice president at Countrywide Funding, the nation's largest independent mortgage banker, "but not many people try. The interest rate isn't negotiable, but we can certainly give someone a quarter-point break on the points. And sometimes we can lower the attorney's fees."

On a $100,000 mortgage, a quarter of a point equals $250. Add in another $50 to $200 for the break on the lawyer, and you're talking about an interesting amount of money--definitely enough to make raising the question worth your while.

And Countrywide's tough. Many lenders are willing to negotiate interest rates, especially if you make it clear that they won't be getting your business otherwise. Knock down the rate on a $15,000 4-year car loan from 9% to 8.5% and you save $170.40 over the life of the loan. Shave one-quarter of a percentage point off the rate on a $100,000, 30-year mortgage (from 8% to 7.75% and you save $6,246. These days, with the rise of risk-based pricing formulas, consumers with excellent credit have more negotiating leverage than ever before.

So what's really negotiable? "With mortgages, almost every variety of closing cost is probably negotiable," says Paul Havemann of HSH Associates.

You can't negotiate in a vacuum, however.

Shop carefully, so you know what you should be negotiating for. To get someone to match or beat the best deal around, you have to know what the best deal is. Make a lot of calls and perhaps a few in-person visits (although you can certainly save money even from afar).

You can bluff about your intentions--maybe you'll walk away from the deal and maybe you won't--but you can't count on bluffing lenders about the competition. Lenders usually have a pretty good feel for the market.

Recognize the three types of negotiating leverage you have.

If you're already a customer, a lender will try very hard not to let you find out that the money may be greener on the other side of town. When asking for a better deal, tell the lender exactly how long you've been a loyal customer and how much you have on deposit.
If you're likely to bring a lot of future business to a lender, you can drive a harder bargain.
If you can convince a lender that you're the kind of tough, principled, rigid (but not necessarily obnoxious) customer who is willing to drive a half hour to save another fifty bucks, you're more likely to get the best deal.
Especially Negotiable Points
The lender's attorney's fees. These are starting to disappear, thank goodness. Tell the lending institution you'd prefer not to pay for its lawyer. Mention that it's a conflict of interest. Talk about another lender who doesn't charge for the service. (Neglect to mention that that lender's rate is one and a half percentage points higher.)

Document-preparation fees. "We charge $125 but will go down to zero when we know we're really competing for the business," says David Davitch, executive vice president at American Financial Mortgage Corp., a mortgage banking firm in King of Prussia, PA.

Points. Sometimes lenders like Davitch will give you a choice -- either one-quarter off on the points or one-eighth of a point chopped off the rate -- but many other lenders who seem horrified at the idea of playing games with the stated interest rate will perform all kinds of tricks with the points, if they think they have to.

The rate. Make it clear to lenders that they're in a very tough fight for your business. Mention competitors by name. Let the lender know what terms he'll have to beat to win.

What do you do when a lender offers to match your best deal but not beat it? Indicate on the phone or in person that this is a pretty boring offer at this point. Heck, you already had that deal in the bag before you had this conversation. Request that a bone be thrown in your direction. You've come this far, and now she's going to let you walk for a few dollars? You can't predict what the lender will do in this situation; there are certain concessions she can't make. But you can sure try.

(Note: The terms you're least likely to get a break on include the application and credit-check fees.)

Before actually taking your business elsewhere, tell your current institutional financial partner precisely what terms you're about to accept. If your institution cares about keeping you, you may be offered a very special deal. Even if the offer is a bit more expensive, the convenience factor may make you stay put.

Refinancing
Refinancing with your existing lender can save you money in many ways. The lender may waive the appraisal, title-search, and possibly credit-check fees. It may also decide to update the title insurance instead of getting an entirely new policy. And there's a good chance that you'll get a better interest rate. But it helps if you push.

When refinancing, ask the lender to order title insurance from the same company that was used before -- and request a discount. You can save 25%-40% of the approximately $400 charge.

Have Late Fees Waived
Smart borrowers can often avoid late fees as well. A good customer who is late with a payment for any reason (neglect, emergencies, temporary cash-flow calamity) should call the lender and ask to have the late fee waived. This will often work--but only once or twice on each debt. Just don't count on it. Try not to make it chronic.

The approach can save $10 here, $15 there. Not a lot, but certainly a reasonable return on an investment of a few minutes.

If you know ahead of time that you'll be a few weeks late, consider alerting the lender before the due date.

Credit Cards
You can also earn a huge amount per hour by calling the toll-free number of your credit-card issuers and demanding a better deal. Ask them to waive annual fees and slash interest rates. If you have good credit, they'll do it more often than not.

To increase your leverage, mention that a more attractive credit card offer--at 6.9%, 7.9%, or whatever -- just arrived in the mail.

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Downsize Your Debt: How to Take Control of Your Personal Finances (published by Penguin Books).
Here's what experts and reviewers have said about the book, now in its fifth printing:

"His book should prove invaluable to anyone considering taking out or refinancing a mortgage, selecting a credit card, or applying for a loan." --Library Journal
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"Borrow another ten bucks and buy this book." -- Andrew Tobias, Time magazine columnist and best-selling author
The "most complete guide to debt management ever written." --Jackie Iglehart, editor of The Penny Pincher
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"All Americans can profit by his advice." --Booklist
You can order copies of the 297-page book for $10.95 (plus $3 for postage and handling) by calling (800) 231-1994, or you can buy it online from Amazon.com. Money back if not satisfied.