How to Negotiate Your Loan Agreement in Wyoming
If you are planning to apply for a loan or are already making applications a loan from the local lenders, one of the most important steps for you to take is to negotiate for more favorable terms for the loan. If this is the first time you are negotiating the terms of the loan, you don’t have to shy away or settle for less than ideal terms for the loan because we have your back.
We understand that the two biggest risks that come with loans include the risk of losing your home, and in other cases, you might end up servicing a very pricey loan. But these don’t have to be the risks you take. To get started on the right path, first, download our free Wyoming loan agreement form. This loan agreement sample is an important part of the loan as it allows you to familiarize yourself with some of the important components of the loan contract, and you also learn about the boilerplate language used by lenders. And even though the borrower will always feel short-changed by the terms of the agreement, knowing what goes into the agreement and the terms you can negotiate is an important step.
But before we look at some of the provisions you could negotiate in your loan agreement in Wyoming, let’s first review the state's usury laws.
Wyoming Usury Laws
To protect consumers, the legal maximum rate of interest to be charged on loans is 7%, although this rate could be changed if there is a written contract, or if the low recommends the change, for example, the law on legal judgments whose prescribed maximum interest rate is 10%. There are no specifications regarding penalties for usurious interest rates, but there are exceptions to the law. These interest rate limitations aren’t applicable to credit sales, extensions of credit to government agencies, or the government, as well as leases and loans for agricultural use.
Negotiating Loan Agreements
The lender will invariably insist on coming up with the first draft of the loan offer, and by doing this, they get to incorporate terms that are highly favorable to them. With a keen eye or the help of legal counsel, you will be able to identify the boilerplate language and other restrictive terms incorporated into the agreement, and this is often a great point for you to kick off the negotiations from. The negotiable provisions are covered below:
Repayment terms and interest rates
The loan amount and the principal should not be the only things that concern you in the loan contract. You also need to review the specifications of the repayment terms and the interest rate. For more favorable terms, base your negotiations on your current financial capability, your relative bargaining power, as well as your revenue projections. You also need to negotiate the interest rates, and where possible, ask for a loan offer with a fixed APR rate, because that would make it easy for you to track and automate your payments. Knowledge of the state laws will also come in handy. Throughout these negotiations, make sure that you settle for a feasible and flexible repayment structure that would save you from disastrous effects.
Work on avoiding defaults
One of the biggest issues around loans and loan contracts has to do with the risk of losing it all because of a non-payment. With this in mind, you must devote a lot of time, research, and even ask for professional advice on how to go about the clauses for default. With breaches of contract bringing in negative effects on personal/ professional/ and business, you need to review the contract while making sure that the terms recommended are realistic – will you (or your business) be capable of satisfying all the requirements or covenants provided? Are the restrictions put in place reasonable? Some lenders require you to provide balance sheet ratios and periodic financial statements before making decisions with big financial implications – can you keep up with such covenants?
To soften some of the default provisions, consider asking for the incorporation of cure periods in case of breaches, insist that penalties imposed be ceased immediately an underlying default has been waived or cured, ask for the incorporation of maximum and minimum dollar limits, or recommend the inclusion of materiality and knowledge qualifiers in your contract. These are some of the options that help in expunging or changing the boilerplate terms in the contract.
You also need to keep under consideration the consequences of a defaulted payment, on your finances.
Think about the property you are pledging as collateral and determine whether there is something else you can list as collateral because of the potential risks involved. Losing the home or ownership control of your business are options you shouldn’t take.
Ask for the removal of the prepayment penalty if it’s incorporated in the contract unless dealing with a qualified or a high-cost mortgage on fixed APR.
To get started with loan contracts in Casper, Cody, Cheyenne, Jackson, Gillette, Laramie, Sheridan, or any other city in Wyoming, download our free loan agreement form here.