Early Payoff Discount: Meaning in a Merchant Cash Advance
An early payoff discount is a reduction the funder gives if you pay the balance before the advance would have run its course. Without one, the purchased amount is owed in full no matter how fast you pay. Some contracts spell it out; others leave it to the funder. It's only real once it's in a written payoff letter.
Where does it show up?
In a prepayment section of the contract, in the offer, or on state disclosures that ask about charges or credits on prepayment.
How do you ask for the discount?
Ask the funder for a written payoff figure that applies the discount, with a good-through date. Check that the contract names the discount, because a verbal promise from a sales rep isn't enough. Send the money only after the figure is in writing.
What does it look like in practice?
$35,000 left, with $10,000 of the fee unpaid if spread evenly. A discount of half the unpaid fee means a $30,000 payoff. Check a quote in the early payoff calculator.
Which owner question goes with this term?
Can I cancel an MCA after I sign? Answers to the questions owners ask about this term, with what to ask the funder.
A term on your offer you don't recognize?
Send us the line and we'll tell you what it means. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.