A prepayment penalty is a fee that banks or lenders charge if you pay off your loan early. Boat loans have an expected payoff date, and if you pay off your loan before that date, you may be charged a prepayment penalty. The amount and if the penalty exists will be stated in your boat loan documents and will be listed under the prepayment penalty clause. It’s a good idea to ask the lender upfront about all loan-related fees including a prepayment penalty, so there aren’t any nasty surprises later on.