How Can Early Repayment On Loans Save Money For My Business?
When we are looking for business loans, one consideration is the early repayment fees or penalty. At Poss Capital, we do not charge any fee or penalty for early repayment. But what does early repayment mean?
Securing A Business Loan
Let's look at Mr. Tan, a SME owner in Singapore.
He has secured a loan of $30,000 with the interest rate of 2% to be repaid over 6 months. This is his loan repayment schedule:
Paying Off Instalments
Mr. Tan paid off January and February instalments on time. He would like to pay off the remaining owed amount in March.
How To Calculate Remaining Final Repayment?
The interest for April, May and June will be waived if Mr. Tan pays the remaining full amount before his instalment due date in March.
Thus, the final amount Mr. Tan will repay in March is:
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So, how much in total?
For a $30,000 loan, Mr. Tan repaid $31,800. As the remaining months' interest was waived off with early repayment, he saved $1800 in interest fees.
Loan amount: $30,000
Interest rate: 2% or $600 monthly
Total amount with all interest fees: $33,600
Total amount repaid in March: $31,800
Saved: $1800
Early repayment can be a strategic move for SME owners seeking to optimize their loan costs. By understanding the terms and conditions of their loans, especially regarding early repayment fees, businesses can potentially save significant amounts on interest payments. Poss Capital's commitment to zero early repayment fees provides a valuable advantage for SMEs looking to manage their finances effectively.
Ready to explore how early repayment can benefit your business? Contact us today to discuss your loan options and learn more about our commitment to helping your SME achieve financial success.
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