Loan Agreement in Missouri: What Can You Negotiate in Your Loan Agreement?
The general consensus and the fact that most of us don’t think they can negotiate with the big lenders is one of the reasons why we end up with very expensive loans. Yet, that should be the case. Like everything else, you should be able to negotiate for favorable terms of your loan agreement, and it gets better when you are aware of the provisions that you need to focus on in your negotiations.
But before you begin the negotiations, you need to make sure that you actually understand what those provisions mean and impact they will have on your loan amount and the repayment schedule. You also need to have an idea about how the whole loan agreement in Missouri looks like – your lenders might appreciate your self-education and the fact that you know exactly what you need or, at the very least, have an understanding of what the contract means. That said, we’d recommend that you get one of our free Missouri loan agreement forms to get started. This sample loan agreement form offers crucial insights into everything you need to familiarize yourself with or agree to before you sign on the dotted lines. Below is a highlight of all the important provisions you should consider negotiating.
Negotiable Instruments of Your Loan Agreement
Interest RatesThis might feel like an obvious provision, and you might have chosen that lender because of the low-interest rates charged, but is that rate provided the lowest, and are there hidden fees that might eventually leave you with an expensive loan that you cannot full service? Will you be able to ever catch a break while servicing the loan?
To help you determine whether the rate charged is favorable or not, the first thing that you need to do is to compare the going market rates and identify other limiting terms included in the agreement. You’d also have to check the statutory limits on interest rates and the applicable usury rates.
In the state of Missouri, there are rules and limitations put in place to protect consumers from exorbitant interest rates. With the usury laws in place, you’d have a better chance at interest rates charged at a fair rate. That said, the legal maximum interest rate charged on loans in the absence of a written agreement is 9%, and in the presence of a written agreement, the interest rate that can be charged shouldn’t exceed 10%, unless the market rate is above 10%. The interest rate charged on court judgments is 9% to higher when the rate is specified in an earlier agreement. If a lender contravenes these laws and if the usury that’s collected is above the applied legal rate, then the debtor might recover the overpayment by as much as twice the value of the interest paid. The lender would also pay the attorney fees and the full cost of the lawsuit.
Exceptions to the interest rate limits above apply to the loans provided to corporations, partnerships, LLCs, as well as business loans valued at at least $5000, as well as real estate loans of the same amount, if they are used for agricultural activities or secured using bonds, certificates of stock, certificates of deposit, and bills of exchange.
With these details in mind, you should be able to negotiate for the most favorable terms on the interest rate charged.
Repayment TermsThis is the other element of the loan contract that is often overlooked, even though you have the option of negotiating for lower repayment terms, or at the very least, a feasible repayment schedule. You need to know that every time a lender presents an offer, there is always a wiggle room that allows you to make flexible payments in the most systematic way possible. You also get to negotiate for more flexible repayment options, thereby lowering the risk of defaulted payments.
When negotiating the terms of repayments, some of the considerations that you need to have in mind include your current financial capabilities, your relative bargaining power, as well as your revenue projections.
Terms of Default and Steps to be TakenYou also have a say when it comes to the steps that would be taken by the lender in case of defaulted payments, which is why you should review this clause very carefully, and from all possible angles.
With a breach of payment posing a huge financial threat to your personal or business finances, you need to go through the default provisions and determine whether you will be able to satisfy the requirements put in place or not. With covenants like the periodic delivery of statements and financial reports to your lender or talking to the bank before taking some actions in mind, be ready to negotiate heavily for the best terms, to ensure your compliance.
Important strategies here include the inclusion of cure periods for any breaches, addition of materiality and knowledge qualifiers, the incorporation of maximum and minimum dollar limits, as well as the insistence on the cessation of penalties once a default has been waived or cured
CollateralWhile the lender’s confidence in extending credit to you depends on what you own and how easily the lender would make their money back if they chose certain assets over others, consider all other options before you put down your home or stocks on the line. And even if you have limited options, the last thing that you want to relinquish control over would be your home or the ownership of your company.
Whether you are in Springfield, Kansas City, St. Louis, Columbia, Joplin, Jefferson City, Branson, or any other city in Missouri, you can access or free free loan agreement form here for the protection of your assets and financial interests.