Eight Bank allows borrowers to prepay their loans in part or in full without penalty. This policy is part of our commitment to providing borrower-friendly, transparent financial services. This document outlines the rules, procedures, and best practices for handling loan prepayments and communicating clearly with borrowers.

• No Prepayment Penalties: Borrowers may pay off their loan early at any time without additional fees.
• Prepayments May Be Partial or Full: Any amount above the scheduled payment may be applied toward principal.
• Borrower Direction Required: Prepayments must be clearly designated by the borrower to apply directly to principal.

1. Notice Requirements

• Full Payoff: Encourage borrowers to request a formal payoff quote (valid for 10 calendar days).
• Large Prepayments: No formal notice required, but recommend borrower confirm application method (principal vs. future payments).

1. Payment Application

• If no instruction is provided:
  • Default is to apply excess to next scheduled payments, not to principal.
• If borrower specifies “apply to principal”, process as a principal-only payment and confirm via system notes.

1. Interest Accrual Timing

• Interest continues to accrue daily until the loan is paid in full.
• Final payoff amounts should account for accrued interest through the anticipated payoff date.

1. Loan Recasting (If Applicable)

• We do not automatically recast loans after prepayment.
• For eligible loans (e.g., certain mortgages), loan recasting must be formally requested and approved.

1. Minimum/Maximum Prepayment Amounts

• No minimum required for extra payments.
• No maximum annual prepayment limits apply (unlike some institutional or regulated products).

1. Source of Funds

• Prepayments must come from:
• The borrower’s verified account
• Approved third parties (only with written authorization)
• Use of borrowed funds (e.g., cash advance, new loan) is discouraged and may trigger regulatory review if flagged.

1. Payoff Procedures

• Confirm that:
  1. All interest through the payoff date is included
  2. Any fees (e.g., late charges) are settled
• Once a loan is fully paid:
  1. Close account in loan servicing system
  2. Release any collateral/lien (e.g., auto title, mortgage release) within regulatory timelines

1. Linked Services

• Advise borrower that prepayment may impact:
  1. Auto-debit discounts
  2. Insurance coverages linked to loan term
  3. Credit reporting: Account will be updated to "Paid in Full"

When a Borrower Inquires About Prepayment:

1. Review the loan account to check balance, interest rate, and current payment status.
2. Confirm the type of prepayment: partial vs. full.
3. Inform the borrower:
   • There is no prepayment penalty.
   • They can make a payment anytime online, by phone, or by mail.
   • To specify if the payment should apply to principal.

When Processing a Prepayment:

• Use transaction code for principal-only payment if applicable.
• Add clear servicing notes:
  • Date, amount, and borrower instruction
  • Method of payment received
• For full payoff:
  • Generate and verify payoff statement
  • Process lien release if secured
  • Send borrower confirmation of account closure