Securing a loan is important, especially when your finances are tight. Besides, securing an instant personal loan can be the only way to solve unplanned costs. But, as you get the loan, you should always remember the repayment will catch up with you sooner than later. The struggle with debts normally comes at the repayment time. At this time, you may have to accept the repayment plan the lender gives you. But, it may not be a suitable idea based on your current financial situation and your future dreams.
Luckily, you can still opt for negotiations for a better repayment plan. But, the plan should also work for both parties. Repayment plan negotiation is very important as it saves you money and improves your score. In other cases, it reduces the levels of stress since you can plan accordingly for the repayment. So, negotiating loan repayment plans is crucial and this guide will elucidate the tips to help you negotiate effectively with your lender.
Repayment Plan- What Does it Mean?
A loan repayment plan is what the lender and borrower agree on regarding the debt repayment. This entails when and how the loan will be paid. Some installment loans, like emergency loans, normally have standard repayment plans that are stated in the repayment terms a borrower agrees on while applying for the loan. Other loans like mortgages, credit cards, etc, have repayment plans specially made to aid in repaying the debt affordably if you are struggling with the payments.
It is beneficial to negotiate loan repayment plans with your lender. But, not only you but the lender will also benefit. The monthly payments and interest rate may be reduced and the tenure extended. As for the lender, they will maintain a good relationship with the borrower and avoid charges and risks of pursuing any legal action. It is a win-win situation. The lender and borrower both benefit in one way or another.
Strategies to Negotiate Repayment Plans
Negotiating a repayment plan with your lender is not easy. But, to ease the process, preparations, proper research and excellent communication skills are needed. Believe it or not, you will be able to raise our chances of landing a good deal that befits your prerequisites and budget.
These are strategies to follow when negotiating the repayment plan with your lender;
1. Devise a realistic budget plan and draft a proposal
Draft an excellent proposal and realistic budget to show your lender. It should reflect the financial situation you’re in currently and your capability to pay back the loan. Apart from that, also make sure you include your assets and liabilities and income as well as expenses. Be sure to capture all the information that can affect your cash flow or DTI, which could come in handy during the negotiations.
Furthermore, determine the amount you can comfortably pay every month and the time it’ll take you to fully repay the loan. You will be able to propose your own repayment plan that matches your goals and needs. Maybe you can propose a lower monthly payment, extend the repayment term, or lower the rate. All in all, being prepared on how you’ll explain why you want a new plan and how it’s going to benefit even the lender in the end is important.
2. Understand your rights and options
Before contacting the lender, you need to familiarize yourself with the rights as well as options of a borrower. You can be eligible for some repayment plans, forbearance, or even forgiveness programs, which significantly reduce the monthly payments and interest rates you ought to pay. But remember, it depends on the specific loan you’ve taken. If it is an NBFC personal loan, you can’t qualify for certain federal plans.
Additionally, you need to assess the loan agreements as well as the terms to fully understand your key responsibilities and obligations as a borrower.
3. Contact the lender for negotiations
With a wonderful proposal already drafted and your budget, you can now proceed to reach out to the lender so you can start the negotiations. You need to act with professionalism, politeness, and respect. Do not be aggressive or emotional. Make sure you are honest with your plan and transparent. When a lender realizes you are not being transparent, the negotiation won’t be a success.
In case any documentation is needed, or evidence, make sure you provide it to support your request. Explain your own situation, proposal, and expectations. Also, listen to the response from the lender and counteroffer. Flexibility and open-mindedness are important in this context. Be willing to compromise to be able to find a solution that benefits both parties.
4. Get professional help
You can consider professional help if you fail to reach an agreement or IF you feel that the lender isn’t being fair or legal. It could be a lawyer, a debt relief company, or a financial advisor. They could come to your aid and help you realize your rights as a borrower and the options you have.
Basically, a third-party individual may help negotiate for your sake. They will help find a resolution between you and a lender. But, make sure you are hiring a reputable professional to avoid scams or higher costs, which may just worsen the situation instead of helping. But remember, using a professional in this matter does not mean you will get a positive outcome. Besides, it might affect your legal status or even negatively impact your score.
To Conclude
In a nutshell, when availing any loan, whether it is an NBFC loan or a traditional bank loan, repayment is mandatory. But sometimes, the plan drafted by the lender may not suit us. In that case, you can negotiate for a better plan with your lender. This article has discussed the key tips you can use to negotiate loan repayment plans with your lender.
