Yes, exceeding your minimum repayment schedule would lead to lower remaining balance for the rest of the loan term. You may also be able to fully pay the loan early if your sales performance permits you to do so. (see Example 2).
Examples scenarios
Here are three examples to help you understand how the minimum repayment process works.
Example 1: Merchant pays above minimum repayment amount at the end of the current loan repayment period
Strong sales enable merchants to exceed their minimum repayments and avoid shortfalls at the end of a monthly period.
Given the loan terms below, the merchant should repay Php 17,500.00 monthly for three months.
At the end of Month 1, the merchant should have repaid a minimum of Php 17,500.00, but exceeded this target by repaying Php 20,000.00. Since they have exceeded the minimum repayment by Month 1, the merchant can still pay the loan on-time even with a slight dip in sales for Month 2 and Month 3.
At the end of Month 2, the merchant should have repaid a minimum of Php 35,000.00. Though their sales have dipped, they still managed to repay Php 36,250.00 by the end of Month 2; they are still on-track and don't have any shortfall in repayment. At the end of Month 3, they end up fully repaying the total amount owed.
Example 2: Merchant pays well above minimum repayment amount and has the capacity to repay early
Merchants with strong sales can also opt for early repayment.
Given the loan terms below, the merchant should repay Php 17,500.00 monthly for three months.
At the end of Month 1, the merchant should have repaid a minimum of Php 17,500.00, but exceeded this target by repaying Php 40,000.00. Since they have exceeded the minimum repayment by Month 1, the merchant can still pay the advance payout on-time even with a slight dip in sales for Month 2 and Month 3.
However, the merchant can also fully repay by Month 2 if they have strong sales and their repayments amount to the entire remaining balance of Php 12,500.00.
Example 3: Merchant does not meet their minimum repayment amount at the end of the current loan repayment period
Paying below the minimum repayment amount for a given period leads to shortfalls that the merchant has to settle.
Given the loan terms below, the merchant should repay Php 17,500.00 monthly for three months.
At the end of Month 1, the merchant should have repaid a minimum of Php 17,500.00 but only manages to repay Php 12,500.00. This means that the merchant has a shortfall of Php 5,000.00 in Month 1. For Month 2, the first Php 5,000.00 of their monthly repayment goes towards repaying the shortfall in Month 1 (so that they meet the minimum repayment for Month 1), and the remaining Php 15,000.00 goes towards repaying in Month 2.
At the end of Month 2, the merchant should have repaid a minimum of Php 35,000.00 but only manages to repay Php 32,500.00. This means that the merchant has a shortfall of Php 2,500.00 in Month 2. For Month 3, the first Php 2,500.00 of their monthly repayment goes towards repaying the shortfall (so that they meet the minimum repayment at the end of Month 2), and Php 17,500.00 goes towards repaying the remaining balance.
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