# Prepayment Penalty Agreement
**This Prepayment Penalty Agreement ("Agreement") is made on [Date] by and between:**
**Lender:**
[Name of Lender]
[Address of Lender]
[City, State, Zip Code]
[Email Address]
[Phone Number]
**Borrower:**
[Name of Borrower]
[Address of Borrower]
[City, State, Zip Code]
[Email Address]
[Phone Number]
**Recitals**
WHEREAS, the Borrower has obtained a loan ("Loan") from the Lender, the details of which are outlined in the associated loan agreement ("Loan Agreement") executed between the parties on [Loan Agreement Date]; and
WHEREAS, the parties acknowledge the importance of mutually agreeing to a prepayment penalty clause regarding early repayment of said Loan.
**1. Definitions**
1.1 **Loan Amount:** The principal amount of the Loan is [Loan Amount in Words] ([Loan Amount in Numbers]).
1.2 **Prepayment Penalty:** The fee incurred by the Borrower for paying off the Loan in full or in part prior to the end of the term.
**2. Prepayment Penalty Terms**
2.1 The Borrower agrees that if they repay the Loan in full or in part prior to [Maturity Date of the Loan], a prepayment penalty shall be applied as follows:
- If repaid within the first [X months/years], a penalty of [Percentage]% of the remaining balance will be assessed.
- If repaid within the subsequent [Y months/years], a penalty of [Percentage]% of the remaining balance will be assessed.
- No prepayment penalty shall apply if the loan is paid off after [Z months/years].
2.2 The Lender shall provide written notice to the Borrower of the exact amount due under this prepayment provision at the time of any early repayment.
**3. Payment of Prepayment Penalty**
3.1 The Borrower agrees to pay the prepayment penalty at the time of the early repayment of the Loan.
3.2 Payment of the prepayment penalty does not alter Borrower's obligation to repay the full Loan amount, as per the terms outlined in the Loan Agreement, minus any adjustment made due to the prepayment.
**4. Governing Law**
This Agreement shall be governed by and construed in accordance with the laws of the State of [State], without regard to its conflict of law principles.
**5. Entire Agreement**
This Agreement constitutes the entire agreement between the parties regarding the prepayment penalty and supersedes all prior negotiation, representations, or agreements, whether written or oral, related to this subject.
**6. Amendment**
No amendments or modifications of this Agreement shall be effective unless in writing and signed by both parties.
**7. Severability**
If any provision of this Agreement is found to be invalid or unenforceable, the remaining provisions shall remain in effect.
**IN WITNESS WHEREOF, the parties hereto have executed this Prepayment Penalty Agreement as of the date first above written.**
_________________________
**[Name of Lender]**
Lender
_________________________
**[Name of Borrower]**
Borrower
**Date:** [Date of Signing]
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### Additional Notes
- Please ensure to fill all placeholders (e.g., [Loan Amount], [X months/years], [State]) with your specific details.
- It is recommended to have this Agreement reviewed by a legal professional.