prepayment

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Prepayment

1. The payment of a debt in full before it is due. Prepayment is good for the borrower because it relieves him/her of the debt, but it deprives the lender of interest he/she would have received otherwise. As a result, some lenders attach prepayment penalties to loans to disincentivize prepayments. Prepayment can me a major risk to collateralized mortgage obligations as coupon payments are based on interest received from the underlying mortgages. Less commonly, this is called anticipation. See also: Prepayment risk.

2. Payment in advance for a good or service not yet received.

prepayment

A payment made before the day it is due. For example, sending a check on the transaction date for securities bought with regular-way delivery will almost surely result in prepayment.

prepayment

or

payment in advance

an expense which is paid in one trading period but which is properly chargeable against the revenues or profits of future trading periods. For example, if a company preparing accounts for the year to 31 December pays its annual rent on 1 April, then only three quarters of that rent relates to the current trading period, the remaining quarter being a prepayment for use of the building from 1 January to 31 March in the next trading period. Prepayments are counted as part of the company's assets at the end of the trading period and are usually included as part of DEBTORS in the firm's BALANCE SHEET. See ACCRUAL.

Prepayment

A payment made by the borrower over and above the scheduled mortgage payment.

If the additional payment pays off the entire balance it is a “prepayment in full”; otherwise, it is a “partial prepayment.” See Partial Prepayments.

References in periodicals archive ?
The Lightbridge PrePay IN solution will enable BTC to offer its prepaid customers the most comprehensive voice and data features and functionality available," said Ed DeArias, vice president, worldwide sales and marketing of Lightbridge.
and Nortel Networks recently reached an agreement to resell the Lightbridge PrePay IN solution to Nortel's GSM customers around the world.
Building on its 12-year heritage in the wireless telecommunications arena, Lightbridge integrates a reliable infrastructure for the mobile business economy that supports the complete customer lifecycle, including customer acquisition, risk management, prepay and replenishment, customer relationship management and retention.
Corsair's strategy is to continue to provide flexible, scalable and cost effective services like PrePay Open and PhoneFuel that leverage our real-time billing engine and allow carriers like Union Telephone to grow their businesses while constantly staying one step ahead of the competition by implementing systems today that are built to meet and anticipate the future demands of consumers.
PrePay Open is Corsair's infrastructure-independent wireless prepaid billing system.
As of April 21, PrePay Open has been running live, allowing BCP and TESS subscribers to use their PrePay wireless accounts while they roam throughout the Sao Paulo area.
Because PrePay Open is built on industry-standard architectures versus a switch-intensive model, the system can reap the dynamic technology advances of servers and relational database models versus more static voice-trunk-based designs.