HomeBlogAccelerated Payment (Explained: All You Need To Know)

Accelerated Payment (Explained: All You Need To Know)

What does Accelerated Payment mean?

How do you define the term Accelerated Payment in simple terms?

What’s essential to know?

Keep reading as I have gathered exactly the information that you need!

Let me explain to you the meaning of accelerated payment and why it’s important!

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What Is Accelerated Payment

Accelerated payment is a term used to refer to a situation when a person or company speeds up the repayment of a loan, debt, or financial obligation.

You can accelerate payment by:

  • Reducing the amortization period of a loan
  • Making payments more frequently
  • Making lump-sum payments

The notion of “accelerated payment” is to suggest that you are voluntarily making additional payments to pay an obligation of some kind.

However, it can also mean that you are forced to pay an obligation before the agreed timetable or schedule.

When you make faster payments, you’ll need to be mindful of the fact that you’ll need more cash or assets to properly pay your debt obligations.

On the one hand, you’ll need to use your available cash flow or short-term assets and on the other hand you can save money by possibly paying less interest on your loan or debt.

Accelerated Payment Definition

Let’s see how others define the term “accelerated payment”.

Accelerated Payment Example

The term accelerated payment is used quite often when you’re dealing with your bank or lender in the context of a loan, mortgage, line of credit, or other types of loans.

For example, when you take a traditional loan or mortgage at the bank, you will need to make principal and interest payments at regular intervals for a fixed period of time.

However, in some cases, your lender can allow you to accelerate your loan payment allowing you to pay it off sooner.

You can speed up your payment by making more frequent payments (for example,  weekly or bi-weekly).

There are other types of loans, like demand loans, that have an accelerated payment option built into the product.

As a result, if you have a demand loan, you will have the right to make more payments at your discretion (without having to get the lender’s authorization).

Takeaways 

So there you have it folks!

Let’s look at a summary of our findings.

Understanding Accelerated Payment

  • An “accelerated payment” refers to the process of speeding up payments or making more frequent payments 
  • When payments are made more often on a loan or mortgage, the lender is reimbursed faster and the borrower incurs less interest charges 
  • Some loans allow you to accelerate payment up to a certain threshold to pay it off earlier than the expected term of the loan 
Accelerated loan
Accelerated mortgage
Accelerated mortgage payoff
Amortization period
Assets
Borrower
Cash flow
Cosign 
Credit card debt
Demand loan 
Extended repayment schedule 
HELOC
Investment 
Lender 
Liquidity 
Loan 
Lump-sum payment
Medicare advance payment 
Open end mortgage 
Payment frequency 
Periodic interim payments
Simple interest mortgage 
VA loan
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