diff --git a/src/components/operations.cairo b/src/components/operations.cairo
index b1cee96..c21b66e 100644
--- a/src/components/operations.cairo
+++ b/src/components/operations.cairo
@@ -79,6 +79,16 @@ pub mod OperationsComponent {
             // Check if stored loan has matching ID and is not in a terminal state
             loan.id == loan_id && loan.status != LoanStatus::NOT_INITIALIZED
         }
+
+        fn can_renegotiate_loan(self: @ComponentState<TContractState>, loan_id: u256) -> bool {
+            if (!self.is_valid_loan(loan_id)) {
+                return false;
+            }
+
+            let loan = self.get_loan(loan_id);
+
+            loan.status != LoanStatus::FORECLOSED && loan.status != LoanStatus::REPAID
+        }
     }
 
     #[generate_trait]
diff --git a/src/interfaces/ioperations.cairo b/src/interfaces/ioperations.cairo
index 21ed0c7..3accc0a 100644
--- a/src/interfaces/ioperations.cairo
+++ b/src/interfaces/ioperations.cairo
@@ -5,5 +5,5 @@ pub trait IOperations<TContractState> {
     fn get_loan(self: @TContractState, loan_id: u256) -> Loan;
     fn is_active_loan(self: @TContractState, loan_id: u256) -> bool;
     fn is_valid_loan(self: @TContractState, loan_id: u256) -> bool;
+    fn can_renegotiate_loan(self: @TContractState, loan_id: u256) -> bool;
 }
-
diff --git a/src/tests/test_operations.cairo b/src/tests/test_operations.cairo
index 397ef99..dbdeb67 100644
--- a/src/tests/test_operations.cairo
+++ b/src/tests/test_operations.cairo
@@ -1,6 +1,5 @@
 use starknet::{ContractAddress};
 use starknet::storage::{StoragePointerWriteAccess, StoragePathEntry};
-use trajectfi::components::operations::OperationsComponent;
 use trajectfi::components::operations::OperationsComponent::{OperationsImpl};
 use trajectfi::types::{Loan, LoanStatus};
 
@@ -335,3 +334,68 @@ fn create_test_loan(id: u256, status: LoanStatus) -> Loan {
         status,
     }
 }
+
+#[test]
+fn test_can_renegotiate_active_loan() {
+    // Setup test environment
+    let mut state: MockOperationsContract::ContractState =
+        MockOperationsContract::contract_state_for_testing();
+
+    // Create an active loan
+    let loan_id = 1_u256;
+    let valid_loan = create_test_loan(loan_id, LoanStatus::ONGOING);
+    state.operations.loans.entry(loan_id).write(valid_loan);
+    state.operations.loan_exists.entry(loan_id).write(true);
+
+    // Verify an active loan can be renegotiated
+    let result = state.can_renegotiate_loan(loan_id);
+    assert(result, 'Loan should be renegotiable');
+}
+
+#[test]
+fn test_can_renegotiate_repaid_loan() {
+    // Setup test environment
+    let mut state: MockOperationsContract::ContractState =
+        MockOperationsContract::contract_state_for_testing();
+
+    // Create a repaid loan
+    let loan_id = 1_u256;
+    let valid_loan = create_test_loan(loan_id, LoanStatus::REPAID);
+    state.operations.loans.entry(loan_id).write(valid_loan);
+    state.operations.loan_exists.entry(loan_id).write(true);
+
+    // Verify a repaid loan cannot be renegotiated
+    let result = state.can_renegotiate_loan(loan_id);
+    assert(!result, 'Loan should not be renegotiable');
+}
+
+#[test]
+fn test_can_renegotiate_foreclosed_loan() {
+    // Setup test environment
+    let mut state: MockOperationsContract::ContractState =
+        MockOperationsContract::contract_state_for_testing();
+
+    // Create a foreclosed loan
+    let loan_id = 1_u256;
+    let valid_loan = create_test_loan(loan_id, LoanStatus::FORECLOSED);
+    state.operations.loans.entry(loan_id).write(valid_loan);
+    state.operations.loan_exists.entry(loan_id).write(true);
+
+    // Verify a foreclosed loan cannot be renegotiated
+    let result = state.can_renegotiate_loan(loan_id);
+    assert(!result, 'Loan should not be renegotiable');
+}
+
+#[test]
+fn test_can_renegotiate_invalid_id_loan() {
+    // Setup test environment
+    let mut state: MockOperationsContract::ContractState =
+        MockOperationsContract::contract_state_for_testing();
+
+    // Use a loan ID that does not exist
+    let invalid_id = 99_u256;
+
+    // Verify an uninitialized loan cannot be renegotiated
+    let result = state.can_renegotiate_loan(invalid_id);
+    assert(!result, 'Loan should not be renegotiable');
+}