No pre-payment penalty...what exactly does that mean?

[Demosthenes]

First some background:

DW and I purchased 250 points at SSR in October. We financed the purchase through Disney for 12 months. We made our first payment in February (for some reason it was 2 months payment in February instead of 1 month's payment in January and 1 month's payment in February). We should have 10 payments left.

DW and I have decided that we would rather pay this off, but only if there is truly no penalty associated with the pay-off. What I want to make sure of is, if I pay off the purchase, will I only have to pay-off the principal, or will the pay-off include some kind of built-in interest? In other words, have I condemned myself to paying the interest on this loan, regardless of when I pay it off?

Thanks in advance.

 

[Caskbill]

You may make additional payments towards the principal at any time. You may also pay off the remaining balance at any time.

There is no pre-payment penalty of any kind.

Interest only accrues on an unpaid balance. If you pay toward principal, you reduce the unpaid balance, thus reducing any future interest payments.

If you pay in full, you are done.

 

[Demosthenes]

Thanks for the quick response.

 

[IndianaMouseLover]

Good question. Thanks for asking this and the responses.

 

[southgal]

First some background:

DW and I purchased 250 points at SSR in October. We financed the purchase through Disney for 12 months. We made our first payment in February (for some reason it was 2 months payment in February instead of 1 month's payment in January and 1 month's payment in February). We should have 10 payments left.

DW and I have decided that we would rather pay this off, but only if there is truly no penalty associated with the pay-off. What I want to make sure of is, if I pay off the purchase, will I only have to pay-off the principal, or will the pay-off include some kind of built-in interest? In other words, have I condemned myself to paying the interest on this loan, regardless of when I pay it off?

Thanks in advance.

I do want to point out, however, that there will surely be some (small) unpaid accrued interest that you will have to pay. It will just be for that short time period between when you made your last payment(s) and the time you do your payoff. HTH

 

[Doctor P]

I do want to point out, however, that there will surely be some (small) unpaid accrued interest that you will have to pay. It will just be for that short time period between when you made your last payment(s) and the time you do your payoff. HTH

That is true, but Disney uses simple interest for their loans which does help.