subject: Renegotiating Your Loans With Your Lender [print this page] When any individual applies for a loan, they usually do it with the intention of paying it back in full along with any other charges or interest as per the terms and conditions of the lender. However, there are times when we face difficulties in repaying the loan amount. This could be a temporary difficulty which could lead to a delay in the monthly repayment obligations or a more serious difficulty which could end up leading to complete bankruptcy.
Whatever may be the issue, when faced with serious difficulties, you need to start renegotiation talks with your lender before it is absolutely too late. Not talking to your lender and continuing to default on payments would only make things worse and make your lender come after you. If you have a mortgage then it could mean losing your home to foreclosure or losing out on other assets you own. Also you can say goodbye to your credit rating as it would end up being so low, no other lender would process your loan application ever again.
To renegotiate with your lender, the first thing you need to do is contact them and make them aware of your current financial difficulties. Write a hardship letter which describes your problems and send it to the concerned department of your lender. By writing a hardship letter, it will not only make your lender be aware of your financial issues but also show them that your intentions are good. It will show you are not trying to avoid them or run away from your obligations. You are trying to face your problems head on and do the right thing.
Of course some lenders would be ready to begin renegotiation talks while others would not be too happy about it. Whatever may be the reaction, it is always good to start the talks and ensure your lender has received the hardship letter. Ask your lender for either a modified repayment plan which has a low interest rate at the moment and maybe after a certain period of time, they can increase the interest rate to cover for the initial few months or years of the modified repayment plan.
Mind you if you feel that your financial troubles are temporary and you will be able to re-start the loan repayment obligations quite soon, you can even apply for a short-term car title loan. In exchange for the title of your car, certain lenders would allow you to borrow an amount which can be used for other loan repayments. In this case, if the car title loan amount is enough to cover your loan repayments in the short term, there is no need to renegotiate your loan with your existing lenders and thereby not taking a hit on your credit score as well.
