April 18, 2024
Windfall Woes: Avoiding Loan Prepayment Penalties
This article explains what a loan prepayment penalty is – a fee some lenders charge when you pay off a loan early. These penalties are most common with mortgages, auto loans, and sometimes personal loans, and are designed to recoup lost interest income for the lender. However, regulations limit prepayment penalties on newer mortgages to a maximum of 2% of the loan balance, and they typically expire after three years. The article advises readers to carefully review loan contracts for hidden terms and to prioritize loans without prepayment penalties,
