You certainly have in mind that, as an individual, renegotiating a loan in order to obtain more favorable conditions is possible, even common.
Did you know that the same is true for professional credit? With an objective similar to that of an individual: to relax or reorganize the general conditions.
Good to know: you will also come across the term “credit redemption”. It is used if the renegotiation takes place with a financial organization different from the one with which the loan was taken out.
Several reasons can lead a business manager to have to redress the situation by renegotiating his business loan, such as organic financial difficulties requiring a little oxygen. In this case he can:
Keep in mind that this type of arrangement will certainly reduce the amount of payments but will also probably increase the overall cost of professional credit.
Our expertise: another possibility is to renegotiate the nominal interest rate. Ask your bank to renegotiate it and do not hesitate to bring in the competition, via the repurchase of professional credit , if the response is not satisfactory.
What levers can you use to obtain better conditions after renegotiating your professional loan?
The interest rate for a professional loan is calculated based on several parameters: type and amount of the loan, duration, personal contribution, guarantees, risks, etc. By soliciting several funding organizations, you will draw up a fairly exhaustive overview in order to select the most advantageous.
Good to know: to save time in your procedures, use the professional credit simulation tools available online. They give you a fairly precise idea of the rate you can expect for your professional loan.
Adjust the repayment period
Extending the repayment period of your professional loan reduces the amount of monthly payments. This allows you to have peace of mind while you regain profitability.
The opposite is also possible, namely early repayment of your professional loan: by reducing its duration, you often lower the total cost.
Change of loan insurance
Another lever to act on is the insurance of the professional loan via its delegation to a third party organization. By subscribing to a cheaper offer with equivalent guarantees, the total cost of contributions will be reduced.
When borrowing bank financing, the Lagarde law of 2010 allows the business manager to take out his insurance contract with another insurer and optimize the overall cost of financing. The Hamon law and the Bourquin amendment go further: the borrower can decide to terminate their current contract for a new one during the first 12 months following signing the loan offer. Then, this change of professional loan insurance is possible on each anniversary date by carrying out the procedures taking into account 2 months’ notice. From the start of the 2022 school year, it will be possible to terminate your contract at any time.
Before committing, you need to calculate the profitability of the renegotiation offers proposed, as the operation may entail additional costs and conditions.
In general, the bank may indeed charge you processing fees. If it is your professional manager who takes the initiative to renegotiate your professional credit, you should not have to pay any fees. Making an explicit request, however, encourages the banking establishment to ask you for these processing fees. But you are entitled to negotiate the percentage of fees on the remaining capital as well as the amount of the fixed commission.
Very often, the application fees amount to 1% of the capital of the loan being renegotiated, while the commission is around €150.
If your objective is to reduce the cost of credit for your company’s finances, also having in mind to measure the cost of banking and insurance offers that the bank may ask you to subscribe to agree, in return, to reduce your rate.
Regarding the postponement of deadlines, if your request for renegotiation is refused, this system extends the duration of the credit by reducing the amount of monthly repayments, but it increases the total cost of the loan. There are two types:
What alternative solutions to professional loan renegotiation?
Credit repurchase, or credit consolidation, is a solution to consider. Your professional loan is then financed by a banking institution other than the one with which you took it out. To reduce the cost of the operation, it is possible to adjust the parameters previously described: the interest rate, the duration or the new insurance contract.
Please note that this approach incurs the same type of costs as for a loan renegotiation. Profitability calculations can be complex. For a professional loan repurchase, get support from a recognized broker who will guide you towards a personalized and optimal solution with its banking partners.
To get an idea of the advantages you could find in changing your financial institution for your credit and to know your eligibility, carry out a professional credit redemption simulation. It’s practical, quick and without commitment!