Business and Personal Finance Dictionary

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 

• PREPAYMENT OR PREPAYMENTS
  
  (1) noun — A term used to describe loan or bond principal payments that are made in excess of the scheduled principal payments and before maturity. Any amount paid to reduce the principal before the due date or in excess of the required principal amortization. Prepayments may be voluntary or involuntary. For example, most residential mortgage loan contracts permit the homeowner to voluntarily prepay his or her loan at any time. Involuntary prepayments are liquidations resulting from foreclosures, condemnations, or casualty.
  
  Back