A prepayment penalty is a fee that a lender charges a borrower who pays off his or her loan before the end of its scheduled term. Prepayment penalties are not charged by most standard lenders. Subprime borrowers should review the terms of their loan offers carefully to see if this fee is included.
Many different types of loans -- including home loans and auto loans -- could include a provision for a prepayment penalty.
Search the Knowledgebase
Browse by Category
The article has been updated successfully.
