prepay
verb
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prepaying
Definition of prepay
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Other Words from prepay
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noun
Examples of prepay in a Sentence
Recent Examples on the Web
Passengers who prepaid for activities on that island will get refunds. — Washington Post, The Denver Post, "Hurricane Dorian slips past Puerto Rico, heads to Florida," 29 Aug. 2019 Historically, Huy Fong would prepay Underwood Ranches for the estimated costs associated with growing and harvesting the chilies. — Alexa Díaz, latimes.com, "Jalapeño farmer wins $23.3 million in heated dispute with Sriracha maker," 12 July 2019 Sprint sells prepaid under the Boost and Virgin brands, AT&T has Cricket, and T-Mobile owned the MetroPCS brand for several years before changing its name to Metro by T-Mobile last year. — Aaron Pressman, Fortune, "How Verizon-Owned Wireless Service Visible Is Getting More Appealing," 26 June 2019 To date, 27 companies have prepaid $3.3 million under the tax, said Lannom, the city tax official. — oregonlive.com, "Portland retail tax applies more broadly than thought, igniting opposition at City Hall," 6 June 2019 United Airlines has offered the service during check-in for a decade and is testing the option for passengers to prepay bag fees even sooner, spokeswoman Maddie King said. — Dawn Gilbertson, USA TODAY, "Hate the hassle of paying bag fees at the airport? American (finally) plans to offer prepay option," 12 June 2019 Reservations are required by Saturday (June 15) and must be prepaid. — Carol Kovach, cleveland.com, "Get ready to celebrate at the 10th annual Hooley on Kamm’s Corners: A Place in the Sun," 11 June 2019 Apple will pay Dialog $300 million in cash and prepay $300 million for Dialog products to be delivered over the next three years. — Tripp Mickle, WSJ, "Apple Swoops Up Engineers From Key Supplier as It Bolsters In-House Chip Design," 11 Oct. 2018 Hundreds of Mecklenburg County residents rushed to prepay $2.8 million in property taxes in the last days of 2017, hoping for a benefit on their income taxes. — Cassie Cope, charlotteobserver, "More than 300 Mecklenburg residents prepaid $2.8 million in taxes | Charlotte Observer," 8 Jan. 2018These example sentences are selected automatically from various online news sources to reflect current usage of the word 'prepay.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.
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More Definitions for prepay
prepayment
nounFinancial Definition of prepayment
What It Is
Prepayment occurs when a borrower pays off a loan earlier than expected.
How It Works
For example, let's say that John Doe borrows $300,000 to buy a house in Phoenix. The loan is a 30-year mortgage at 5% interest. John lives in the house for five years and makes his payments on time every month. However, in year six, he gets a job offer in Philadelphia and decides to move there. Accordingly, he sells his house. At the closing, the buyer gives John $500,000 for his house. John uses $250,000 to pay off the remaining balance on the loan instead of making 25 more years of payments. John has prepaid the loan.
Why It Matters
When a borrower prepays a loan, the borrower saves a lot of interest. But that means the lender also misses out on all that interest. Accordingly, prepayment can sometimes come with a penalty, and this is disclosed in the loan documents.
People who invest in pass-through securities are also frequently concerned about prepayment. That's because those securities that receive payments from an intermediary that collects payments from a pool of assets. The most famous of these is mortgage-backed securities (MBS), which represent an interest in a pool of mortgage loans.
When people move, as we’ve seen, they sell their houses, payoff their mortgages with the proceeds, and buy new houses with new mortgages. When interest rates fall, many homeowners refinance their mortgages, meaning they obtain new, lower-rate mortgages and pay off their higher-rate mortgages with the proceeds. This means the lenders and the MBS investors miss out on interest income due to prepayment.
Source: Investing Answers
prepay
verb
English Language Learners Definition of prepay
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prepay
verb
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prepay
transitive verb
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