Photo by 401(K) 2012
Penalties
In some cases a lender may have a pre-payment penalty in the fine print of the loan documentation. If you suddenly get a windfall and pay the loan off early the institution can make up for the lost interest by charging you a fee. Always ask about paying off the loan early before you sign the papers.
Lenders also charge penalties and fees for other things, such as late payments or bounced checks. If you write a bad check, you may get charged for both of the aforementioned fees, although some lenders only charge you a nonsufficient funds fee. If you bounce multiple checks, the lender may revoke your right to pay via check and ask you to only pay using cash or money orders.
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