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What are the terms and procedures for prepayment of loans?

April 26, 2017Loans prepayment procedures terms

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What are the terms and procedures for prepayment of loans?

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Borrowers should contact IBRD’s Loan Client Services about loan prepayment loanclientservices@worldbank.org. Provided that they are current on their obligations, borrowers can partially or fully prepay a loan on a 45-day notice. Partial prepayment of the withdrawn loan balance is applied in the manner specified by the borrower or, in the absence of any specification, in inverse order of the principal installments due. When contacted about prepayment, Loan Client Services will send borrowers an estimate of the prepayment premium and other charges that they would have to incur if they chose to go through with the prepayment. The actual premium and charges to be paid upon prepayment might be different from the estimates provided. The premium covers the cost to IBRD of redeploying prepaid funds. The prepayment premium charged is based on the difference between the basis spread of the prepaid loan and the cost spread of the new loan to which the funds are redeployed.