You want to pay off a loan early or switch to a lower rate — but you hesitate because you don't know the prepayment penalty (중도상환수수료). Enter your prepaid principal, fee rate, and time elapsed below and see the estimate instantly. If 3 years have passed since the loan started, it's usually waived — check that first.
| Prepaid principal | 0 |
| Fee rate | 0% |
| Fee period | 0 mo |
| Elapsed | 0 mo |
| Remaining period − elapsed | 0 mo |
| Estimated penalty | 0 |
Formula: principal × rate × (remaining ÷ fee period). After the fee period (usually 3 years) it's 0 (waived). Check your exact rate and terms in your loan contract or bank app. This is an estimate.
What is a prepayment penalty?
A prepayment penalty is a fee the bank charges when you repay a loan earlier than agreed — compensation for the interest income and handling costs it loses. Two things matter most: it's usually waived after the fee period (typically 3 years), and while charged, it shrinks in proportion to the time left.
The formula
| Item | Detail |
|---|---|
| Formula | principal × fee rate × (remaining ÷ fee period) |
| Fee period | usually 3 years from the loan start (0 after that) |
| Remaining | fee period − time elapsed (more elapsed = smaller fee) |
Example: repaying ₩100 million at a 1.2% rate, 3-year fee period, 1 year (12 months) in: ₩100M × 1.2% × (24 ÷ 36) = ₩800,000. It shrinks over time:
| Elapsed | Remaining | Penalty (₩100M · 1.2% · 3yr) |
|---|---|---|
| 6 months | 30 mo | ₩1,000,000 |
| 1 year | 24 mo | ₩800,000 |
| 2 years | 12 mo | ₩400,000 |
| 2.5 years | 6 mo | ₩200,000 |
| 3+ years | 0 mo | ₩0 (waived) |
Typical rates by loan type (reference)
It varies by bank and product, but roughly, for the major Korean banks. Your exact rate is in your contract.
| Loan type | Fixed rate | Variable rate |
|---|---|---|
| Mortgage | ~1.4% | ~1.2% |
| Personal credit loan | ~0.7–0.8% | ~0.6–0.7% |
Falling since 2025. From mid-January 2025, prepayment penalties in Korea were reformed to an "actual-cost basis" — banks may charge only within their real losses and administrative costs. Rates are trending down, so it's worth re-checking the current rate even on an existing loan.
When it's waived
- Fee period (usually 3 years) has passed — most loans waive it after 3 years. Check this date before repaying.
- Within an annual free-prepayment allowance — some banks let you repay up to a limit (e.g., 10% of principal per year) with no fee.
- Re-contract or promotional products at the same bank may waive or reduce it.
For the strategy of paying down principal, see loan payoff vs. saving/investing; for switching to a lower rate, see when refinancing pays off.
Pre-repayment checklist
- ☐ Confirm your exact fee rate (contract or bank app)
- ☐ Check the fee period and loan start date → has 3 years passed?
- ☐ Check for an annual free-repayment allowance
- ☐ Refinancing? Compare penalty vs. interest saved (guide)
- ☐ Spare cash? Compare loan rate vs. deposit/investment return (guide)
FAQ
Q. Is it really free after 3 years?
Most loans charge no prepayment penalty once the fee period (usually 3 years) has passed. Periods can vary by product, so check your contract — especially if you're within days of that date.
Q. Does a partial repayment incur a fee?
Yes, on the portion repaid. But some banks waive it up to an annual allowance (e.g., 10% of principal), so it's worth checking.
Q. Why does the bank's charge differ from this calculator?
Banks compute by exact days, and fee-period, rate, and allowance rules differ by product. This is a monthly estimate — use it as a guide and confirm the exact figure with your bank.
Two keys to the prepayment penalty: has the fee period (usually 3 years) passed, and it shrinks with the time remaining. Check your loan start date and rate before repaying, and you won't lose out.
This calculator gives an estimate based on the standard formula; the actual fee depends on your bank, product, and contract. Confirm the exact amount and any waiver with your lender. This is general information, not financial advice. See also our savings maturity calculator and compound interest calculator.
