Hi all,

Looking for some advice for my mom. Several years ago she sold some land and gave the buyer a 10-year seller-financed loan at 5% interest. She's on good terms with the buyer, who wants to prepay a portion of the loan and is hoping to get a discount for doing so. There are 5 years remaining on the loan, and the principal is about $200k. The buyer wants to prepay $50k.

My mom could use the cash and wants to do this, but she understands there's an opportunity cost with the interest she'd be forgoing. I'm trying to help her figure out what kind of discount would be reasonable in this situation. I was thinking the buyer could get an additional 10% of the prepaid amount deducted from the remaining balance, but I'm really just guessing. Any ideas? Are discounts for prepayment even a thing? Seems like the issue with prepayment is usually whether a penalty will be applied, not a discount. But again, my mom could use the cash.