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 At the scammer’s directions, the victim bought two Green Dot cards, which are prepaid debit cards, totaling $480, and called back for further instructions. Bob Sandrick, cleveland, "Brook Park resident scammed out of $480 by fake FirstEnergy worker," 17 Jan. 2020 That’s because the people holding the underlying mortgages are more likely to prepay and refinance into a lower rate. Washington Post, "Never Mind Yield Curves. What’s Negative Convexity?," 11 Sep. 2019 Theft: Richmond Road A Speedway manager reported Dec. 18 that an employee loaded two Gold Dot prepaid credit cards without making any payment. cleveland, "Car stolen in city is recovered in Maple Heights with four boys inside: Richmond Heights Police Blotter," 20 Dec. 2019 For Texas families with the means to start saving now, the tactical question is whether to fund a traditional 529 investment account such as the Texas College Savings Plan or to prepay tuition via the Texas Tuition Promise Fund. Michael Taylor,, "Taylor: Should you prepay your child’s college tuition?," 20 Dec. 2019 In exchange, each will receive a 25 percent match from the fund established by the Legislature in 2018 to encourage employers to prepay their future pension obligations. oregonlive, "Oregon PERS opens employer incentive fund to provide matching funds on extra pension contributions," 11 Sep. 2019 Dish Network, which will also benefit from the merger by absorbing Sprint’s prepaid wireless subsidiaries, has also promised to base its new wireless company in Colorado for at least seven years in return for Weiser withdrawing from the suit. Joe Rubino, The Denver Post, "T-Mobile launches nationwide 5G network expected to reach 60% of U.S. population," 2 Dec. 2019 To me, that’s a reflection of GE’s decision to dump an additional $4 billion to $5 billion of cash into its pension fund next year to prepay minimum obligations for 2021 and 2022. Washington Post, "GE’s Latest Casualty? Pension Promises," 8 Oct. 2019 The cost for each class is $45, but students can prepay for all three for $120 and save $15., "Community News For The Farmington Valley Edition," 22 Nov. 2019

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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Time Traveler for prepay

Time Traveler

The first known use of prepay was in 1839

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Statistics for prepay

Last Updated

18 Feb 2020

Cite this Entry

“Prepay.” Dictionary, Merriam-Webster, Accessed 26 Feb. 2020.

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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


How to pronounce prepay (audio)

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

Thesaurus: All synonyms and antonyms for prepay

Rhyming Dictionary: Words that rhyme with prepay

Spanish Central: Translation of prepay

Nglish: Translation of prepay for Spanish Speakers

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