Re-negotiating Loans

[HCBailly]

Question: How do I re-negotiate loans?

Andviv pointed me in the direction of the topic on re-negotiating loans with banks (thanks a lot) which had some useful information. I didn’t feel like hijacking the topic, so I thought I would start my own here. Currently, I have three major loans that I would be interesting in re-negotiating:

1) My business loan. I used it to purchase my business a couple years ago. The monthly payments are very high, and I’ve paid off 85% of the interest. This seems like the easiest one to renegotiate, since they’ve already said they’re willing to do it in April, when I will have been in business for two years. I wouldn’t so much be re-negotiating the loan; more like refinancing it over a longer period of time. Overall, this would increase my net cashflow by over $500/month.

2) My personal residential loan. I’m not sure there’s much I can do with this, but I thought I would throw it out there. Between my dad’s gift amount and my cash, I was able to put 20% down on the property, so I wouldn’t have to pay PMI. Of course, negotiating the principle balance down would be great, but I don’t think they have an incentive to do so. Slightly more likely would be to pull out the equity to pay off the business loan, which would increase my net cashflow by well over $1000/month. However, since banks are being uber-paranoid about appraisals, I simply can’t pull out enough equity, even with my 750+ credit score.

3) My business van loan. This one is relatively small in the grand scheme of things, but I thought I would just throw it out there for discussion. I doubt there’s anything that can be done about this one.

I don’t see what incentive the banks have to negotiating with me, but if I could do that, it would greatly increase my ability to survive, since business is extremely slow right now. To be frank, unless spring REALLY helps my business more than in past years, doing nothing about these loans is not an option. Fortunately, I have more than enough cash to survival until April (the two-year mark), even if I did zero business, which I highly doubt. I think things will turn around, but re-negotiating at least the first loan would really help.

Any thoughts on the situation?

Thanks for your help.

 

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[bflbob]

Many banks still have plenty of money to loan.

Your bank might not have an incentive to negotiate, since they already have your business.
But the bank down the street might be willing to make you a sweet offer.

Once you have their offer, it might cause yours to negotiate.

 

[andviv]

great questions....

I like Bob's idea... take your loan docs to another bank and ask them what they can offer you so you transfer that loan to their bank.

About mortgage, what I found out was that none of the banks I have mortgages with wanted to even look at them if I am current with my payments.

 

[HCBailly]

I walked into a bank this morning to ask what I could do about my business loan. Since my credit score is so high and I’ll have been in business for two years, my options look pretty good. The one I talked to said that I wouldn’t so much re-finance the loan, as I would apply for a new one to pay off the old one. In addition to directly reducing my payments, I would also be able to get my interest rate lowered to 7%.

They said a home equity loan could happen, but I probably couldn’t pull out enough equity to pay off the business loan. The big problem with my business loan is that it was a 5-year loan, which makes the payments really high. That’s why I want the home equity loan, as it would spread out the payments over a longer period of time. Is it possible to find a 10-year business or personal loan to replace my old one? That would almost guarantee my survival, even in this economic climate.

Are there any websites that you would recommend for finding good loans? I’ve heard of Lending Tree, but I don’t know how reputable they are. Or should I just continue walking in the front door of various banks in my area?

Thanks for the tips.

 

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[GLC65]

I walked into a bank this morning to ask what I could do about my business loan. Since my credit score is so high and I’ll have been in business for two years, my options look pretty good. The one I talked to said that I wouldn’t so much re-finance the loan, as I would apply for a new one to pay off the old one. In addition to directly reducing my payments, I would also be able to get my interest rate lowered to 7%.

They said a home equity loan could happen, but I probably couldn’t pull out enough equity to pay off the business loan. The big problem with my business loan is that it was a 5-year loan, which makes the payments really high. That’s why I want the home equity loan, as it would spread out the payments over a longer period of time. Is it possible to find a 10-year business or personal loan to replace my old one? That would almost guarantee my survival, even in this economic climate.

Are there any websites that you would recommend for finding good loans? I’ve heard of Lending Tree, but I don’t know how reputable they are. Or should I just continue walking in the front door of various banks in my area?

Thanks for the tips.

The best leverage you have is your deposits. Entice the new bank that if they give you a new loan that you will transfer your business operating account and transfer all of your personal accounts. See what they say. Once they give you an offer, go to the next bank and see if they can beat it. Repeat the process until you feel like you got a deal of a lifetime.