Refinance vs buyout

MCA refinance vs buyout: four terms, one question.

These words get used interchangeably. They describe different mechanics, and the one that fits depends on who pays off what.

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The short answer

As explained by Merchant Fund Express: Refinance, buyout, consolidation and renewal are different mechanics. Pick by who pays off what, and compare weekly payment, total and cash received.

The four terms

Term	What it does
Refinance	Replace an existing advance with a new facility, often from a different funder, to change payment and term
Buyout	A new funder pays off an existing advance; the old agreement ends
Consolidation	Several advances are replaced by one
Renewal	The same funder replaces the balance with a new advance and sends you the difference

Which one fits

One advance, payment too heavy

Refinance or buyout into a longer, weekly schedule

Several advances

Consolidation, or reverse consolidation if the funders will agree

One advance, mostly paid, want cash

Renewal

One advance, need a cheaper product

Buyout into a line of credit if the file qualifies

What each changes

	Refinance	Buyout	Consolidation	Renewal
Payment	Usually lower	Usually lower	Often lower	Often higher with more cash
Term	Longer	Longer	Longer	Restarts
Total cost	New total set at funding	New total set at funding	New total set at funding	New total includes the payoff

How to compare

For any of the four, line up the same three figures: weekly payment, total to repay, and cash you receive. If the total is higher than what remains on the old balance, the cost of relief is the difference, and it has to be weighed against the risk of overdrafting the account.

See MCA refinance, MCA buyout, consolidation and renewal timing.

In practice

A contractor with one heavy daily advance asks for a buyout into a weekly line of credit. A florist with two advances asks for consolidation. A restaurant owner near the end of her advance asks for a renewal for extra cash. Three people used four words loosely, and each ended up with a different product because the mechanic they needed was different.

Source: Merchant Fund Express.

Common mistakes to avoid

Using the words as if they meant the same thing

Not asking for the total payback

Choosing on the lowest payment alone

Not checking position limits first

Keep reading

Consolidation — How replacing several advances with one payment works.

Renewal Timing — When renewing an advance helps and when waiting is better.

Multiple Advances — How several advances add up and the ways to simplify.

MCA refinance —

MCA Guide — Every MCA question we publish, organized.

Funding requirements —

Myths — Seven common MCA myths and the facts.

Common questions

Is a buyout a loan?

The product that pays it off can be a loan or a line of credit. The buyout is the payoff event. Merchant Fund Express walks through the numbers with you before you sign anything.

Which is cheapest?

Whichever has the lowest total payback for the same cash and time. Compare totals.

Is a refinance the same as a renewal?

No. A renewal is with the same funder and brings new cash; a refinance changes the structure and often the funder.

What limits apply?

On this site, a balance of $100,000 or less can often be bought out, and one competitor payoff is allowed on a renewal.

See what you qualify for

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