Prepayment is the phenomenon which marks the repayment of loan before time and in early installments. The borrower normally repays the loan in order to save oneself form the high interest rates and the repayment is observed in cases of the refinancing by the borrower.
Various forms of prepayment
Normally the borrowers want to get rid of the debt as soon as possible. Having the debt prepaid will save the borrower from the increasing interest rates within a short span of time. In this way the borrower gets satisfaction from the debt or installment payment when the debt is released within due date of time. In this way all the problems can be solved within the due official date as mentioned in the contract and agreement of the debt on part of both the borrower and lender. There are many ways in which the prepayment of the loan can be made and this helps in the payment and withdrawal of the whole amount.
Mode of payment of debt and loan
There are different modes and ways in which the prepayment of the debt and loan credit can be done. Sometimes the prepayment can be done for the whole payment of debt or the amount which is remaining. In some cases this payment is done in advance. Any upcoming payment can also be paid in terms f the prepayment of the debt or loan. Usually the borrowers want to make the prepayment on the date in advance of the date on which the borrower is obliged according to the contract to return the complete debt or loan.
Types of prepayment depending on debts
There are different kinds of debts and in the same way there are many other associated obligations associated with these debts. Various obligations can be settled down in advances by the borrower in the form or prepayment. In addition to payment of debts, the payers can also use the procedure of prepayments on the tax forms. The main aim of using the prepayment application is to settle down the future tax settlements. Another positive development in case of prepayments is that it is without any penalty or mortgage.
- Debt ratios
- Liquidity ratios
- Profitability ratios
- Asset management ratios
- Cash Flow Indicator Ratios
- Market value ratios
- Financial analysis
- Business Terms
- Financial education
- International Financial Reporting Standards (EU)
- IFRS Interpretations (EU)
- Financial software
Most WantedFinancial Terms
- Most Important Financial Ratios
- Debt-to-Equity Ratio
- Financial Leverage
- Current Ratio
- Interest Coverage Ratio (ICR)
- Solvency Ratio
- Break-even Point
- Debt Service Coverage Ratio
- Receivable Turnover Ratio
- Return On Capital Employed (ROCE)
Have 10 minutes to relax?Play our unique
Play The Game