A prepayment penalty is a fee some loans charge if you pay off the balance early.
A prepayment penalty is a contractual charge imposed when a borrower repays all or part of a loan's principal before scheduled maturity.
If you might pay off or refinance early, a prepayment penalty can change the math. Check whether one applies before signing.
Paying off a loan years ahead of schedule could trigger a fee if the note includes a prepayment penalty clause.
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