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Does paying it off early save anything?
On an amortising loan, usually. On a fixed-total product, usually not. This shows which one you have and what the difference is worth.
Does paying early save you anything?
On a term loan, yes. On a factored advance, usually not — the amount owed is fixed at signing unless the contract carries an early-payoff discount.
- You would pay today
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- You save
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Get the payoff figure in writing before you send the money. A discount described on a phone call is not a discount.
Two products can look identical on the front page and behave in completely opposite ways when you try to clear them early. On a loan that accrues interest on a declining balance, paying early stops the clock. On a purchase of receivables, there is no clock to stop.
Enter the structure you actually have. The calculator shows what early payoff saves, what it costs if a penalty applies, and what it does to the effective rate you paid.
A rebate or early-payoff discount only exists if it is written in the agreement. Ask for the clause, in writing, before you plan around it.
The terms in this calculator
Questions about the early payoff calculator
Does paying off a business loan early save money?
On a simple-interest amortising loan, yes — interest accrues on what is outstanding, so a shorter life means less of it. How much depends on how far into the term you are, because the early payments are mostly interest.
Does paying off a merchant cash advance early save money?
Usually not. The purchased amount is fixed at signing. Paying sooner delivers the same dollars over less time, which raises the annualised cost rather than reducing what you pay. Some funders offer a discount; it has to be in writing.
What is a prepayment penalty and how is it calculated?
A charge for clearing early, calculated in one of several ways: a percentage of the balance, a stepped-down schedule by year, a fixed number of months' interest, or yield maintenance. The methods produce very different numbers on the same loan, so find out which one your agreement uses.
What is the Rule of 78s?
A method of allocating interest that front-loads it, so an early payoff refunds less than a straightforward interest calculation would. Its use is restricted in some consumer contexts; business agreements are a different matter, so check what your contract says.
Should I get a payoff letter?
Always, and in writing, with a good-through date. A balance is not a payoff figure — the payoff includes accrued interest, any penalty, and fees, and it changes daily.
Will the lender release the UCC filing after payoff?
They are supposed to. If a termination statement is not filed, there is a process for demanding one, and in many cases the debtor can file it themselves once the secured party has failed to act. Do not assume it happened.
Is it better to pay early or keep the cash?
If the debt is expensive and the cash has no immediate job, paying down usually wins. If the payoff would leave you without a cushion, the cheapest debt is the one you did not need to take next month because you ran out of money.
Does early payoff help my business credit?
It can, but not always in the way people expect. A closed account stops adding positive payment history, and on revolving credit, closing a line can raise your utilisation on what remains.
Can I partially prepay?
On many amortising loans yes, and it can either shorten the term or reduce the payment, depending on the agreement. Ask which one your lender applies, because the saving is very different.