A prepayment clause allows the payee or holder to accelerate payment of the principal amount of an instrument.

Name: A prepayment clause allows the payee or holder to accelerate payment of the principal amount of an instrument.
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Question

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A prepayment clause allows the borrower to pay off the principal amount of a loan before its maturity date without incurring a penalty, not the payee or holder to accelerate payment.

A Prepayment Clause Allows the Payee or Holder to Accelerate