Renegotiations
What is Renegotiation?
Section titled “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.
Loans funded by a Private Offer cannot be topped up nor have new tranches added. See Offer Options.
Refinancing vs Renegotiation - Key Differences
Section titled “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
Section titled “How Renegotiation Works”- Any lender makes a renegotiation offer on a borrower’s loan
- Borrower reviews the proposed terms (could be better or worse)
- Borrower decides whether to accept or decline
- If borrower accepts: Borrower pays any required amounts upfront, terms change immediately
- Lock-ups reset: New 15% refinancing restrictions based on new loan duration
What Borrowers Pay When Accepting
Section titled “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
Section titled “Types of Renegotiation Offers”- Item-Specific: New offers made specifically for the borrower’s NFT
- Collection-Level: Borrowers can accept any active collection offer as renegotiation terms
Adding New Tranches
Section titled “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
Section titled “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