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Renegotiate A Loan: How It Works

It may happen that some time after obtaining the loan that was needed, the need arises to renegotiate the  reference for student loan as a result of a new and sometimes unforeseen economic condition . In fact, in the event that the monthly payment is too heavy on personal expenses, the customer can request the bank or credit institution to renegotiate the personal loan with the aim of accessing more advantageous conditions.

The most convenient solution when it comes to renegotiating a loan is certainly to extend the duration of the loan so that the installments are lightened. However, this path is not always favorably followed by banks.

Renegotiating a loan means changing some conditions of the loan in agreement with the Bank, as a result of different economic needs.

Can a loan be renegotiated?

The renegotiation of a loan is a customer’s right in the event that his economic condition changes and he wants to continue to pay his installments regularly without the risk of finding himself with unpaid payments or delays.

As anticipated, the bank is not at all obliged to accept the customer’s request, so it is advisable to explain well all the reasons that led to this need.

Being aware of the customer’s new economic condition and its consequent need, the credit institution may prove more inclined to meet the request by reducing the amount of the installment rather than facing the risk of a possible non-repayment.

In any case, the credit institution, before deciding whether or not to comply with the request for a loan renegotiation, must proceed with a check to assess the creditworthiness of the customer . The latter will therefore have to procure again all those guarantees and documentation already provided previously. Once all the necessary documents have been received, it will be possible to ascertain the reasons that led to the request for renegotiation, a verification of the new income situation in order to arrive at a decision.

Is it worth renegotiating a loan?

As we have seen, renegotiating a loan is not always an easy way to go, above all it is necessary to be careful about the actual convenience of this operation . Let’s see in detail when it is convenient and when not.

  • It is worthwhile if the interest rate will be more advantageous ;
  • It is worthwhile if you have already paid installments;
  • It is convenient if you do not want to look for other credit institutions but you have established a relationship of trust with the one you have previously chosen;
  • It is worthwhile if you have a paycheck because it is a guarantee both for you and for the credit institution;
  • It is not recommended in the case of self-employed workers as a guarantor will be required for the renegotiation;
  • It is not worthwhile if the conditions are not clear , if the rate is much higher or if additional ancillary costs are hidden;
  • If you have suffered foreclosures or have not paid any other installments in the past, the bank may not accept your renegotiation request.

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