Prepayment penalty

{
  "id": "MLC-T-LAW-003860",
  "term": "Prepayment penalty",
  "field": "Law",
  "definition": "A fee charged to a borrower who pays off a loan in full or makes a substantial principal reduction before the scheduled maturity date. This clause compensates the lender for the loss of future interest payments that would have been collected over the full term of the loan. Federal regulations, such as those under the Truth in Lending Act, limit or prohibit these penalties on certain types of mortgage loans.",
  "url": "https://mlchart.com/terminology/law/prepayment-penalty/"
}