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What is a pre-payment penalty?

Pre-Payment Penalties

A pre-payment penalty is a penalty that your lender
assesses if you make pre-payments to your principal
balance or if you pay off your loan before the
maturity date.

Before signing any loan documents, make sure that
the contract does not state that if you pay off
the loan balance early you will be required to
pay a pre-payment penalty, since these penalties
can be as much as 1% of the principal balance.
being paid off.

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