Not entitled to refund of part of finance charge....

[Caleb87]

I saw this on a personal loan application.....no prepayment penalty but also not entitled to a refund of portion of the finance charge...this loan woukd be paid off early which usually saves on interest..does this mean i would have to pay the entire repayment amount regardless of when i pay it off???

[DaveInAZ]

"No prepayment penalty" usually means no "unearned interest" is paid. For example, for a 5 year loan paid off at year 3 the "unearned interest" is the interest that would be charged during years 4 & 5.

Is there an upfront fee, like a 5% or so origination fee? Most personal loans do. "Not entitled to a refund of portion of the finance charge" would mean that if you payoff early you don't get a refund on any of the upfront origination charge.

[Caleb87]

Yes its about 300 dollars. It would be a 7000 dollar loan with 1080 payback if i use the whole term of 35 months however it will be paid off by the end of this year