A swap agreement where payment is made upfront for specific quantities of an asset or commodity that would be delivered at multiple specified times in the future. The upfront payment is equal to the present value of the future asset/commodity deliveries.

The prepaid swap could also refer to an annuity-like swap whereby the present value of future payments on the fixed leg is paid today, whereas the floating leg payments are made as in a regular swap. In effect, this swap is quite analogous to a variable rate loan.