Prepayment: meaning, definitions and examples

Commonly used in finance or business to indicate payment made before receiving goods or services. This term is typically more formal.

• The customer made a prepayment to secure their booking
• Prepayment discounts are offered for early settlement of invoices

Used when discussing payment made ahead of time for goods or services. It often implies a part payment before the full payment is due.

• Before starting the project, the contractor requested an advance payment
• An advance payment of 30% is required to confirm the order

Commonly used in contexts involving large purchases, particularly property and vehicles. It denotes an initial payment made when something is bought on credit.

• They made a down payment on their new car
• A 20% down payment is typical when buying a house

Refers to a sum of money paid as a security to ensure commitment to an arrangement. It is often refundable and used in real estate, rentals, or reservations.

• She paid a deposit to hold the apartment until she could move in
• The deposit will be refunded if there are no damages

Used to describe paying for goods or services before receiving them. Common in service industries and with large orders.

• The company requires a prepayment of 50% before starting the project
• She made a prepayment on her loan to reduce interest costs

Indicates that payment is made at the beginning of a transaction, prior to receiving the goods or services. Common in freelancer contracts and high-value transactions.

• The contractor asked for an upfront payment to cover materials costs
• Upfront payments are often used to secure commitment

Typically refers to a payment made ahead of receiving a loan or financial service, often in situations that could be scams or frauds. Has a somewhat negative connotation.

• They asked for an advance fee before processing the loan application
• Be cautious if someone requests an advance fee for a job offer