Is a Longer MCA Term Always Better?
Not always. A longer term lowers each payment, which helps cash flow, but funders often charge a higher factor for more time. You pay more in total for the smaller payment. Choose the longest term only if you need the lower payment to get through slow months. Otherwise, the shorter term usually costs less.
What does this look like with real numbers?
| Shorter term | Longer term | |
|---|---|---|
| Advance | $40,000 | $40,000 |
| Factor | 1.30 | 1.42 |
| Total payback | $52,000 | $56,800 |
| Weekly payment | $2,000 over 26 weeks | $1,420 over 40 weeks |
| Extra cost | $4,800 |
The longer term saves $580 a week and costs $4,800 more. Whether that's worth it depends on your slowest month.
How do you decide on the term?
Put both into the offer comparison tool. It shows cost per dollar and an estimated APR side by side.
What quick test shows whether a longer term pays?
Take your slowest recent month of deposits and divide by the number of weeks in it. Then compare the weekly payment on each term with that number. If the shorter term's payment is more than about a fifth of a slow week, the longer term is usually the safer choice even though it costs more. If both payments fit easily, the shorter term usually costs less overall. The offer comparison tool puts both terms side by side.
A longer term also means more time exposed to a slow season, so check the payment against your slowest month, not your average one.
What should you ask the funder?
- What factor would a shorter term carry?
- Is there an early payoff discount on the longer term?
- Can the payment be weekly?
- What's the total payback on each option?
Where can you check your own numbers?
The short version is in the Offers FAQ. To check the numbers on your own advance, use the offer comparison tool.
Want a second look at your advance?
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.