Glossary

Renewal

A new advance offered before the current one is paid off.

A renewal (or "refi" or "top-up") is a new advance offered once a portion of the current one is repaid, often for a larger amount. The critical question is whether the new factor rate is applied to the unpaid balance of the old advance: if so, you pay a fee twice on the same money. Serial renewals turn a short-term product into a permanent, expensive one.

How it appears in a contract

A new agreement; the payoff of the old balance is netted from the new funding. Check the funded amount versus the new purchased amount.

Worked example

Renewing with $10,000 still owed on a $25,000 payback, for a new $30,000 advance at 1.25: the new payback is $37,500, of which $12,500 is cost, and $10,000 of the "new" money goes to pay off the old balance that already carried a full factor.

Illustrative figures on stated assumptions; not quotes.

What to ask

• Is the old balance discounted at renewal or charged the new factor again?
• How much new cash do I actually receive?
• What is the combined estimated APR across both advances?

Related terms

Stacking · Early payoff discount · Factor rate · all terms