> For the complete documentation index, see [llms.txt](https://docs.gondi.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.gondi.xyz/gondi-v3/renegotiations.md).

# Renegotiations

#### What is Renegotiation?

**Renegotiation = Flexible Loan Changes (Borrower Approval Required)**

Renegotiation lets any lender propose new terms for a borrower's existing loan - like extending the due date, changing the APR, or adjusting the principal. **Unlike refinancing, the borrower must approve** because terms might not always be better.

#### Refinancing vs Renegotiation - Key Differences

| Refinancing                                 | Renegotiatio                            |
| ------------------------------------------- | --------------------------------------- |
| **Automatic** (no borrower approval needed) | Requires borrower approval              |
| **Only better terms** allowed               | **Any terms** allowed (better or worse) |
| **APR must improve** by 10%+                | APR can go up or down                   |
| **Cannot shorten** due date                 | **Can extend or shorten** due date      |
| **Instant** when offered                    | **Borrower chooses** whether to accept  |

#### How Renegotiation Works

1. **Any lender** makes a renegotiation offer on a borrower's loan
2. **Borrower reviews** the proposed terms (could be better or worse)
3. **Borrower decides** whether to accept or decline
4. **If borrower accepts**: Borrower pays any required amounts upfront, terms change immediately
5. **Lock-ups reset**: New 15% refinancing restrictions based on new loan duration

#### What Borrowers Pay When Accepting

**Always pay**:

* All accrued interest to date

**Additional payments depend on principal change**:

* **Principal decreases**: Borrower pays the difference
* **Principal increases**: Borrower receives extra funds (minus accrued interest and any origination fee)
* **Principal stays same**: Only pay accrued interest

**Example**:

* Current loan: 10 WETH principal, 0.5 WETH accrued interest
* Renegotiation: 12 WETH principal, 0.2 WETH origination fee
* Borrower receives: 2 WETH increase - 0.5 WETH interest - 0.2 WETH fee = 1.3 WETH

#### Types of Renegotiation Offers

1. **Item-Specific**: New offers made specifically for the borrower's NFT 
2. **Collection-Level**: Borrowers can accept any active collection offer as renegotiation terms

#### Adding New Tranches

**Any time during a loan**, lenders can offer additional junior tranches (Top Up) to increase the borrower's principal. This gives borrowers access to more funds if their NFT's value has increased.

#### Common Renegotiation Scenarios

* **Extending maturity**: Loan due soon, borrower wants more time (may pay higher APR)
* **Increasing principal**: Borrower's NFT gained value, wants to borrow more