Prepayment
Market basicsPaying off part or all of a loan ahead of schedule.
In plain terms
Most effective early, when almost all of the EMI is interest. Always ask the bank to cut the tenure, not the EMI.
1492 terms
Glossary
Every term is defined twice: once the way a filing would put it, and once the way somebody would explain it to you across a table. The second one is usually the one that sticks.
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Foreclosure charges
Market basicsAlso called: Prepayment penalty
A fee levied for repaying a loan in full before the end of its tenure, sometimes with a lock-in period before prepayment is permitted at all.
In plain terms
It decides whether a cheaper loan you find later is actually worth switching to. Check it before signing, not when you want out.
Collection efficiency
Fundamental analysisThe share of amounts due in a month that a lender actually collected, on that lender’s own definition of both figures.
In plain terms
The fastest-moving number a lender publishes and the least comparable across companies, because some count arrears and prepayments in the numerator and some do not. Above 100% is a definitional artefact, not an achievement.
Gain on assignment
AccountingAlso called: Gain on derecognition of assigned loans
The present value of the excess interest spread on a sold loan pool, recognised in income at the moment a transfer qualifies to come off the balance sheet.
In plain terms
Future interest brought into this quarter. It does not repeat unless another pool is sold, and it rests on disclosed assumptions about prepayment and default that reduce the spread actually collected.