prepayment penalty
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English
Alternative forms
Noun
prepayment penalty (plural prepayment penalties)
- An additional fee charged for paying off part of or the entirety of a loan ahead of the scheduled due date in order to compensate for the loss of interest income suffered by the creditor in such case.
- 2012, Oren Bar-Gill, Seduction by Contract:
- Prepayment penalties can be viewed as a necessary supplement to the escalating-payments feature: If borrowers prepay before the end of the low-rate introductory period and thus avoid the high post-reset rates, then the escalating-payments feature becomes moot.
Translations
fee charged for prepayment of a loan
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