How do I know if my personal loan has a prepayment penalty?

Where to find the prepayment penalty clause: The loan agreement you sign at closing (electronic or paper) contains the full terms including any prepayment penalty. Look in the 'Prepayment' section or search the document for 'prepayment', 'early payoff', or 'penalty'. The Truth in Lending disclosure should also mention it if applicable.

Lenders that commonly have no prepayment penalty: LightStream, SoFi, Marcus, Discover, LendingClub, Prosper, Avant, Upgrade - these all advertise no prepayment penalty. Most major online lenders have moved away from prepayment penalties.

Who might still charge one: Some community banks and credit unions still charge a prepayment penalty, though this is becoming less common. Some installment loan companies (OneMain Financial historically) include them. Always check regardless of lender type.

How penalties are calculated when they exist: Flat fee ($100-$300). Percentage of remaining balance (1%-3%). Interest for a set number of months (60-90 days interest). The 'Rule of 78s' (a now-uncommon method that front-loads interest calculation and effectively penalizes early payoff). The Rule of 78s is now illegal for loans over 61 months under federal law.

If you already signed and discover a penalty: Calculate whether early payoff savings exceed the penalty. If savings minus penalty are positive, paying off early still makes financial sense. If the penalty eliminates most of the savings, making extra principal payments without fully paying off can reduce total interest without triggering the penalty clause (check your agreement - some penalties only trigger on full payoff).