Negotiation techniques for loan interest rates

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Welcome to EY Ireland EN You are visiting EY Ireland EN. Link copied. How to negotiate with your banks and lenders in uncertain times. David Martin. Related topics Strategy and Transactions. Show resources. In brief. T he economic headwinds which have faced the Irish economy recently and are likely to continue into , predominately relate to: Rising interest rates Rising inflation Energy price fluctuation These headwinds have had an impact on Irish borrowers who may have both existing debt and new debt requirements with banks and alternative lenders.

Borrowers are navigating difficult trading conditions which results in cases of: actual or potential breached covenants issues in meeting debt obligations and therefore potential events of default funding deficits against their business plan refinance risk Debt plan for discussion with lenders As part of a debt plan and working with your advisor companies, you should consider some of the following items: 1 Present to the lender early Both traditional and real estate companies should present to their lender early, whether they are looking for new debt, facing a refinance or covenant breaches, by presenting a critically assessed, recast set of numbers with robust assumptions, lenders are more likely to provide covenant waivers or recast covenants.

The self-help measures and the financial model outlining forecasts should result in you fully understanding the funding requirement of your company, which in turn helps you identify the debt ask from the lender. Assess your facility agreement and ensure you fully understand the terms and conditions of your lending documents, including all covenants, what your covenant headroom is and all events of default that are in your lending documents.

Having established the funding requirement of your business, being able to demonstrate to a lender how they are getting repaid is a key part of your negotiation. Whilst banks and most debt funds will usually expect repayment to come from the free cashflow of the business, some debt funds and special situation funds will look at repayment from other sources including the sale of assets, partial disposals and other liquidity events.

Debt solutions available When negotiating with your lenders from overseas there is a range of options which may be helpful. Some of the types of debt companies should consider: Growth finance — Expansion? Acquisition finance — Buying another business? Recapitalisation — Capital structure optimisation?

Special Situation — Liquidity funding? Private Placement — Long-term debt? of 5 years Avg. of 5 years. Conclusion Economic headwinds are likely to continue into , with the lack of certainty due to inflation and geo-political events.

Related articles. Show more. About this article. Connect with us Our locations My EY Site map Legal and privacy. Facebook LinkedIn Twitter YouTube. If you follow some of the suggestions in this article, you may be able to make real improvements to your credit situation.

We get it, credit scores are important. No credit card required. Home My Personal Credit Knowledge Center Debt Management How to Negotiate with Lenders Reading Time: 5 minutes.

In this article. Get your free credit score today! Related Content What Are the Different kinds of Debt? Reading Time: 6 minutes.

Establish a Relationship with the Lender Offer Collateral Choose a Shorter Loan Term

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How NOT to Negotiate a Car Deal. 5 things to NEVER do! Lozn bring together extraordinary people, like you, to Express funding sources a better working world. EY Netotiation clients create long-term value for all stakeholders. This can make financial planning and budgeting more difficult, especially for those with fixed incomes or tight budgets. Here's a step-by-step guide to negotiating with your lender for a better home loan rate in Australia:. Popular Post. Applying for home loan: How to negotiate to get a better interest rate?

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