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.