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Prepayment Fees

Prepayment fees are charges that are assessed when a borrower makes a payment on a loan in excess of the required minimum payment. Prepayment fees are often imposed on loans with variable interest rates, and they are intended to compensate the lender for the lost interest that would have been earned if the loan had remained outstanding. Continue Reading Below

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Encyclopedia Articles

Discover the definition of financial terms related to prepayment fees.

Prepayment Privilege: What It Is, How It Works, and Its Impact on Borrowers Thumbnail

Prepayment Privilege: What It Is, How It Works, and Its Impact on Borrowers

Dan Agbo

Public Securities Association Standard Prepayment Model: Understanding Prepayment Risks in Mortgages Thumbnail

Public Securities Association Standard Prepayment Model: Understanding Prepayment Risks in Mortgages

SuperMoney Team

Prepayment Penalties: Understanding, Avoiding, and Navigating the Mortgage Maze Thumbnail

Prepayment Penalties: Understanding, Avoiding, and Navigating the Mortgage Maze

SuperMoney Team

What is Yield Maintenance? Examples and Application in Finance Thumbnail

What is Yield Maintenance? Examples and Application in Finance

Alessandra Nicole

Learn About Prepayment Fees

Thumbnail for Blog Article: What Are Car Loan Prepayment Penalties? How They Work & How to Avoid Them

What Are Car Loan Prepayment Penalties? How They Work & How to Avoid Them

Andrew Latham

About Prepayment Fees

Prepayment fees are charges that are assessed when a borrower makes a payment on a loan in excess of the required minimum payment. Prepayment fees are often imposed on loans with variable interest rates, and they are intended to compensate the lender for the lost interest that would have been earned if the loan had remained outstanding. Prepayment fees can be a significant cost for borrowers who are trying to pay off their loans early, and they should be carefully considered before making an extra payment.