May 11 , 2016

Tampa School of Real Estate

Prepayment Penalty

Definition:   the amount set by the creditor as a penalty to the debtor for paying off the debt before it matures

Pronunciation:  \(ˌ)prē-ˈpā-mənt\\ˈpe-nəl-tē\

Used in a Sentence:   A prepayment penalty is charged by a lender to recoup a portion of interest the lender planned to earn when the loan was made.

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