Should I pay off my business loan early?

2 min read

Saves interestThe upside

Check ERCAny penalty?

Keep a bufferDon't drain cash

When it's worth it

Early repayment saves the remaining interest, so on a loan with no early-repayment charge and where you have spare cash, it can be a clear win. But note that on an amortising loan most interest is paid early in the term, so settling near the end saves less than you might expect. Check the exact saving with your lender.

What to weigh

Don't drain your cash reserve to clear a loan — the interest saved may be less than the value of keeping cash available for opportunities or shocks. Confirm there's no penalty (Credicorp charges none), and if the cash could earn a better return in the business than the loan's rate, keeping it working may beat early settlement.

What it means for you

Credicorp lends to your company, not to you personally, and takes no personal guarantee. See business loans or apply online.

Frequently asked questions

Is there a penalty for repaying a business loan early?

It depends on the lender. Some charge an early-repayment fee; others, including Credicorp, don't. Always check before overpaying — a penalty can wipe out the interest you'd save.

Should I use my cash reserve to pay off a loan?

Usually not entirely. Keeping a buffer for shocks and opportunities is often worth more than the interest saved. If the loan rate is low and cash is tight, keep the reserve and repay to schedule.