Accelerated payment refers to when a borrower pays off a loan more quickly. In order to do this, you can:
- Shorten the amortization period, which will increase the amount of each regular payment
- Making planned additional lump-sum payments on time
- Making payments more frequently, such as weekly or biweekly rather than monthly.
Accelerated repayments lower the borrower’s interest costs (the total fee paid to the lender for the loan). A consistent cash flow is necessary for this to be beneficial for a business. It is prudent for firms to find out if they may switch back to a slower repayment schedule in case their cash flow changes before committing to an expedited payment schedule.
The monthly payment for the majority of loans consists of both principle and interest. Demand loans typically allow for additional lump sum payments to be made at the borrower’s discretion and without hassle. In essence, this indicates that accelerated payment options are generally available for loans.
