I've not been able to find the answer to this question. I am looking specifically for the law as it applies only to the state of Arizona.
If I take a loan for a car purchase, can I be penalized for paying it off sooner than the term of the contract?
State laws vary on the matter, and I was unable to determine anything further than, "These penalties are allowed in 36 states, although they are prohibited around the U.S. for loans longer than 61 months." (carsdirect.com) I don't even see a list of the alleged 36 states.
Background - I intend to buy a car and the dealer wants me to get a loan for it so they can profit off the interest each month. I prefer to pay the full cost all at once. Knowing they won't sell me the car on that condition (because it reduces their possible revenue on the sale), I likely will have to take a loan. I would like to make 1-2 payments, then pay it all off. But not if there's a prepayment penalty. Which is why I am asking if Arizona law prohibits penalties for pre-payment of a loan.
