5 Strategies to Repay Your Capital Fund Loan Faster
Make More Than the Minimum Payment on Your Capital Fund Loan
You finally took the plunge and invested in your business by securing a capital fund loan. Congratulations, that’s a huge accomplishment! Now it’s time to shift your focus to repaying that loan as quickly as possible. Why rush to pay it off, you ask? Simply put, the faster you repay your loan, the less interest you’ll pay overall and the more money you’ll save. Not to mention the sense of freedom and reduced stress that comes with eliminating debt. If loan repayment is one of your key financial goals this year, you’ve come to the right place. We’ve compiled five proven strategies to help you repay your capital fund loan faster so you can get back to focusing on growing your business. Lenders like Capital Fund 1 know that the sooner you implement these strategies, the sooner you’ll be debt-free and keep more of your hard-earned money. So what are you waiting for? Let’s get started!
Refinance Your Capital Fund Loan to a Lower Interest Rate
Make More Than the Minimum Payment on Your Capital Fund Loan
Paying more than the minimum due each month is one of the fastest ways to pay off your loan early and save on interest charges. Even rounding up your payment by $10 or $20 can shave months off the life of the loan and thousands in interest.
Pay Biweekly Instead of Monthly
If your loan is billed monthly, consider switching to biweekly payments. By paying half the monthly payment every two weeks, you end up making an extra full payment each year. For example, if your monthly payment is $200, biweekly payments of $100 would total $2,600 over the year, compared to $2,400 for monthly payments.
Make Extra Principal Payments
When you have extra cash, put it towards your loan principal. Payments made directly to principal reduce your balance faster. If your lender allows additional payments online, take advantage of that. Or you can send a check with “apply to principal” in the memo. Even small amounts of $20 or $50 help cut down interest charges.
Round Up Your Payments
If possible, round up your payments to the next $10 or $25. So if your payment is $157, pay $160 or $175. Over the life of the loan, those small amounts add up to big savings. It’s an easy way to pay a little extra each month without a huge impact on your budget.
Pay a Fixed Extra Amount Each Month
For the most effective approach, determine an extra fixed amount you can afford to pay each month, like $50 or $100, and pay that on top of your regular payment. Make it automatic if you can. Over time, that consistent additional payment will significantly speed up repayment and reduce your interest costs.
Stay dedicated and keep chipping away at that balance. Before you know it, you’ll be debt free and reaping the rewards!
Use a Debt Consolidation Loan to Lower Your Monthly Payment
Refinancing your Capital Fund loan to a lower interest rate is one of the fastest ways to pay it off sooner. Lower interest means lower payments, so more of your money goes toward paying down principal instead of interest charges.
Check Your Credit Score
The better your score, the lower the interest rate you can qualify for. Pay down credit cards and check for errors in your credit report. A score over 680 will open up more refinancing options.
Research New Rates
See what kind of rates you can get from your current lender and other banks or credit unions. Even a 1-2% drop can save thousands over the life of the loan. Apply for preapproval from multiple lenders to compare offers.
Consider a Shorter Term
If cash flow allows, refinance to a shorter term like 10-15 years. Your payments will be higher but you’ll pay the loan off faster and save money in the long run. Make extra principal payments when possible to pay it off even sooner.
Compare Closing Costs
While a lower rate is appealing, make sure any closing costs are worth it based on how long you plan to keep the loan. Ask if the lender will waive or reimburse closing costs – some will if you have an existing relationship or qualify for certain programs.
Refinancing a Capital Fund loan is simple but can be very rewarding. With the right strategy and some effort finding the best new terms, you’ll get out of debt faster and keep more money in your pocket each month. The sooner you start, the sooner you’ll be making your last payment!
