Prepayment

Any amount paid to reduce the principal balance of a loan before the scheduled due date.

Any amount paid to reduce the principal balance of a loan before the due date or payment in full of a mortgage. This can occur with the sale of the property, the pay off the loan in full, or a foreclosure. In each case, full payment occurs before the loan has been fully amortized.

The payment of a debt before it actually becomes due.

The payment of a debt before it actually becomes due.