How to Negotiate the Terms of Your Loan Agreement in Nevada
Do you ever stop to ask for a better deal on your loan agreement’s terms before you click on the I Agree button or sign on the dotted lines? Did you know that you can actually negotiate the terms of your loan agreement, whether you are applying for a personal loan or a business loan? While most of us assume that the drafted repayment or amortization schedule provided by the lender is their final representation of their terms, the truth is that those terms are negotiable, just like most of the things we have to buy or sign up for. Besides negotiation, a review of the terms of your agreement allows you to identify some of the nefarious terms that the lenders might have incorporated into the agreement.
Finally, you need to review the terms of the agreement because a loan agreement is a legally binding agreement that specifies the terms of the agreement while also specifying the responsibilities of the parties to the agreement (lender and the lender). Once signed, you cannot go back on the agreement, and even if you can do that, you will suffer legal and financial repercussions for that action. So, since you don’t want to be in a situation were you signed off on an agreement with unfavourable terms, you must review the terms and negotiate where necessary.
To get started with the review of the terms, even before your discussion with the lender, we recommend downloading the free Nevada loan agreement form online. This sample loan agreement is editable, easy to use, and it encompasses all the important sections of the agreement, basically, all the essential sections of the agreement. While the loan agreement in Nevada is also referred to as the promissory note (also a money lending agreement, a loan contract, or a business loan agreement), it’s worth noting that even though these documents serve the same purpose, the loan contract is substantially more comprehensive than the promissory note and while the loan agreement is enforceable with the signatures of both the lender and the borrower, the promissory note only needs the signature of the borrower. The promissory notes can be secured or unsecured promissory notes, and they are common among friends or family, where smaller amounts of money exchanges hands.
Now that we have the basics out of the way, let’s look at some of the negotiable provisions of the loan agreement:
Interest Rates and the Repayment Plan
Besides the definition of the terms used in the agreement, the next important section that you must review is the clause that covers interest rates. Even with the market going rates, you could also negotiate for a lower interest rate, especially if you have a great credit score. But even without that, you have the right to negotiate for better terms.
You should also be aware of the state’s maximum legal limits on interest rates. Note that unlike the other states, the state of Nevada hasn’t put in place usury limits or maximum interest rate, and if you are getting a loan without a written agreement, you would be charged the prime interest rate applied by the largest bank in the state.
The other important consideration you need to keep in mind is that the repayment terms laid out by your lender are negotiable. As you look for the most favorable terms for the loan and a flexible repayment plan that will not leave you struggling financially, think about your financial capabilities, your revenue projections, as well as your relative bargaining power. At the end of the day, you don’t want to sign up for terms that would leave you in the default side of things, because as you know, the effects of a defaulted loan would be disastrous.
The other consideration you need to keep in mind is the default terms that have been put in place by a lender, and whether those terms will leave you at a good financial spot or not. If you are getting a business loan, you might be required to pride periodic financial statements and reports to the lender, and in other cases, your lender might have to consent to your new application. Keep in mind, however, that regardless of the measures put up by the lender, you need to watch out for strategies such as the inclusion of more generous cure periods for a breach, incorporation of maximum and minimum dollar limit, the addition of qualifiers, as well as the insistence on the cessation of ramifications and penalties after an underlying default has been waived.
What can you part with if things turn to the worst? Would the lender repossess your car or foreclose on your home too soon after you default? While you have numerous collateral options and you could negotiate for more favorable terms, you need the keep in mind that the last thing you would want to do for your business is to relinquish control and full ownership of your business over an unpaid loan balance.
Once you’ve reviewed these terms, then you can sign the contract, but only if you agree on the proposed terms after the negotiation.
Whether you are in Reno, Las Vegas, Carson City, Henderson, Sparks, Elko, Virginia City, or any other city in Nevada, you can download our free loan agreement here to get started