FAQ Categories

Can I pay off financed equipment early?

Yes, you can typically pay off financed equipment early. However, it’s important to check your financing agreement for any prepayment terms or penalties. Some agreements may include fees for early repayment to compensate for the interest the lender would lose. Always review your contract or speak with your finance provider to understand the specifics of your agreement before making an early payment.

Early Repayment Policies:

Most financing agreements allow for early payoff, but terms can vary. It’s crucial to review your specific contract or consult with your finance provider to understand the policies related to early repayment.

Prepayment Penalties:

Be aware that some lenders may charge a prepayment penalty. This fee compensates the lender for the interest they lose if the loan is paid off before the end of the term. The structure of these penalties can vary, so understanding the details in your agreement is essential.

Benefits and Considerations:

Paying off your equipment loan early can free up cash flow and reduce your debt burden. However, consider your company’s overall financial situation. Sometimes, it might be more beneficial to retain cash reserves for operational needs or unexpected expenses, especially if the loan has a low interest rate or if prepayment penalties are high.

Learn more about how to apply for an SBA loan.

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