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Getting out of debt is a great thing no matter what type of loan you're repaying. But it's especially great with a business loan because it means you'll have more cash flow freed up to re-invest back into your business.
But before you repay your business loan early it's important to know whether you will be charged early repayment penalties. This guide will take you through what you need to know before you repay your business loan ahead of schedule.
Lender | Can you repay early without penalty? | Find out more |
---|---|---|
Banjo | ![]() | View loan |
Business Fuel Loans | ![]() | View loan |
GetCapital | ![]() | View loan |
Kikka | ![]() | View loan |
NAB | ![]() | View loan |
Max Funding | ![]() | View loan |
Moula | ![]() | View loan |
OnDeck | ![]() | View loan |
Prospa | ![]() | View loan |
Spotcap | ![]() | View loan |
Early repayment differs depending on the type of business loan you have. If you have a business term loan it would just involve getting in contact with your lender and asking to make an additional repayment or repaying the entire loan early. Here, you should confirm there are no early repayment fees.
If you have a line of credit you can arrange payment on your own. In either case, make sure your payment has gone through and that you are only being charged for what you owe after making your additional repayment, not the original amount.
Generally speaking, if your lender has no prepayment fees and no discharge fees then you can save money by paying the entire business loan back sooner. If your lender does have early repayment or discharge fees then it might still be possible to save money with early repayments, or it could end up costing you even more.
Here is what to consider before repaying your business loan early:
It might seem like a good idea to pay back your business loan early, but even if there are no prepayment or discharge fees it might not be in your best interests.
Early repayment isn't always the right option, and providers without prepayment fees are not always an ideal choice. However, it is an important factor to consider when comparing business loans. Even if you choose not to use it, simply having the option of paying a loan back early without worrying about hidden costs is always good for peace of mind.
Picture: Shutterstock
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