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Tuesday, June 27, 2006

Prepayment

A clause that allows a borrower to make larger (oradditional) payments than the amount stated in the loan agreement

It’s in your best interest to make extra or bigger monthly payments on your loan since this will reduce your loan balance quicker than if you only paid the amount that’s due. You’ll also cut down the interest that you need to pay.

Prepayment is also called the "or more clause."
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