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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

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