Prepayment Penalty
A fee some lenders charge if you pay off a loan earlier than scheduled.
A prepayment penalty is a fee that some lenders charge if a loan is paid off before its scheduled term ends. This offsets the interest income the lender expected to earn over the full term of the loan.
Not all funding programs include prepayment penalties, and some are structured to actually reward early repayment with reduced total costs. It’s worth confirming this detail for any specific program before committing.
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