Prepayment

A prepayment penalty, also known as an early payoff penalty, is a fee you will have to pay if you pay back your loan ahead of the predetermined schedule.

An old adage says don't borrow more than you can repay. In other words, one should borrow as little as possible and repay as quickly as possible.

One avails loans to meet various needs in life, like home loans, vehicle loans, personal loans, education loans, business loans and so on. A major responsibility is then to repay these loans. One can go for the more common ‘repayment throughout the entire loan term’ or a few opt for ‘Prepayment or Foreclosure of their loans’.

As humans, we have various needs and wants. Availability of credit is a great bonus that helps you in achieving those needs or wants much beyond what your income or savings can support. Moreover, comparable to varied needs is the availability of various types of credit, each one tailored to cater to a purpose.