Penalty levied for pre-payment of a loan is an additional income of an organization.

Explanation: The organizations who are lending money to the clients have given a commitment for a certain period. When a customer or a client prepays the loan amount, the business loses probable income assuming that the funds may not get the same level of income as that of the existing deployment. Hence penalty is levied which acts as a deterrent and a firm commitment on the part of the customer. This also cultivates a financial discipline.