pre·​pay | \ (ˌ)prē-ˈpā How to pronounce prepay (audio) \
prepaid\ (ˌ)prē-​ˈpād How to pronounce prepaid (audio) \; prepaying

Definition of prepay

transitive verb

: to pay or pay the charge on in advance

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Other Words from prepay

prepayment \ (ˌ)prē-​ˈpā-​mənt How to pronounce prepayment (audio) \ noun

Examples of prepay in a Sentence

Special orders must be prepaid.

Recent Examples on the Web

United Airlines has offered the service during check-in for a decade and is testing the option for passengers to prepay bag fees even sooner, spokeswoman Maddie King said. Dawn Gilbertson, USA TODAY, "Hate the hassle of paying bag fees at the airport? American (finally) plans to offer prepay option," 12 June 2019 Reservations are required by Saturday (June 15) and must be prepaid. Carol Kovach,, "Get ready to celebrate at the 10th annual Hooley on Kamm’s Corners: A Place in the Sun," 11 June 2019 Apple will pay Dialog $300 million in cash and prepay $300 million for Dialog products to be delivered over the next three years. Tripp Mickle, WSJ, "Apple Swoops Up Engineers From Key Supplier as It Bolsters In-House Chip Design," 11 Oct. 2018 Hundreds of Mecklenburg County residents rushed to prepay $2.8 million in property taxes in the last days of 2017, hoping for a benefit on their income taxes. Cassie Cope, charlotteobserver, "More than 300 Mecklenburg residents prepaid $2.8 million in taxes | Charlotte Observer," 8 Jan. 2018 Pimco built models that could analyze that information, and predict when borrowers might prepay their loans. Justin Baer, WSJ, "The Arms Race for Quants Comes to the World’s Biggest Asset Managers," 21 June 2018 The company could shore up its debt prices further by prepaying $2 billion to $4 billion of bonds that fall due in 2019 and 2020, Barclays said in its report. Matt Wirz, WSJ, "GE Bonds Rebound as Bargain Hunters Swoop In," 26 Nov. 2018 Middle-schoolers had prepaid $232,505, or $455 each for the three-day trip. James Ewinger,, "Schools want answers, refunds after Discovery Tours cancellations," 3 May 2018 MetroPCS, T-Mobile’s prepaid phone brand, is remaking its image in an attempt to appeal to more people. Rachel Lerman, The Seattle Times, "T-Mobile rebrands prepaid line to emphasize network coverage," 24 Sep. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'prepay.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of prepay

1839, in the meaning defined above

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Statistics for prepay

Last Updated

21 Jun 2019

Look-up Popularity

Time Traveler for prepay

The first known use of prepay was in 1839

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More Definitions for prepay



Financial Definition of prepayment

What It Is

Prepayment occurs when a borrower pays off a loan earlier than expected.

How It Works

For example, let's say that John Doe borrows $300,000 to buy a house in Phoenix. The loan is a 30-year mortgage at 5% interest. John lives in the house for five years and makes his payments on time every month. However, in year six, he gets a job offer in Philadelphia and decides to move there. Accordingly, he sells his house. At the closing, the buyer gives John $500,000 for his house. John uses $250,000 to pay off the remaining balance on the loan instead of making 25 more years of payments. John has prepaid the loan.

Why It Matters

When a borrower prepays a loan, the borrower saves a lot of interest. But that means the lender also misses out on all that interest. Accordingly, prepayment can sometimes come with a penalty, and this is disclosed in the loan documents.

People who invest in pass-through securities are also frequently concerned about prepayment. That's because those securities that receive payments from an intermediary that collects payments from a pool of assets. The most famous of these is mortgage-backed securities (MBS), which represent an interest in a pool of mortgage loans.

When people move, as we’ve seen, they sell their houses, payoff their mortgages with the proceeds, and buy new houses with new mortgages. When interest rates fall, many homeowners refinance their mortgages, meaning they obtain new, lower-rate mortgages and pay off their higher-rate mortgages with the proceeds. This means the lenders and the MBS investors miss out on interest income due to prepayment.

Source: Investing Answers



English Language Learners Definition of prepay

: to pay for (something) before you receive or use it
: to pay (something) before you are required to pay it


pre·​pay | \ ˈprē-ˈpā How to pronounce prepay (audio) \
prepaid\ -​ˈpād \; prepaying

Kids Definition of prepay

: to pay or pay for beforehand prepay the bill

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pre·​pay | \ prē-ˈpā How to pronounce prepay (audio) \
prepaid; prepaying

Legal Definition of prepay

: to pay or pay the charge on in advance (as of date due or maturity date) no penalty for prepaying your student loan

Other Words from prepay

prepayment noun

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More from Merriam-Webster on prepay

Rhyming Dictionary: Words that rhyme with prepay

Spanish Central: Translation of prepay

Nglish: Translation of prepay for Spanish Speakers

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