Frequently Asked Questions (FAQs)

What is a pre-payment penalty?

An option.

When you sign up for a loan, often there is a 1, 2, or 3 year pre-pay. This simply means that there will be fees and penalties paid by the borrower if the loan is paid off before the specified pre-pay date. The amount of a pre-payment penalty can run thousands of dollars. Lenders place pre-pays on loans in order to encourage the borrower to stay committed to the loan and the bank. Often lenders will waive the pre-pay if the borrower agrees to refinance the loan through the same lender and pay a new set of fees. To avoid this penalty being placed on the loan, you can ask your Parklor consultant to make sure your loan does not include a pre-pay. If you are 100% sure you will keep the loan for the time specified in the pre-payment penalty, then it is not worth paying a higher interest rate to avoid this penalty.