"Are prepayment penalties on car loans legal in DC? "

I live in Washington, DC and financed a car two years ago. I now have the money to pay off the loan, but I don’t know if I will be penalized for doing so. I heard that these penalties are illegal in some states. What about in DC?

Answer
“Prepayment penalties are legal in a majority of states—36 to be exact. And they are also legal in the District of Columbia, so you may be penalized for paying off your loan early.
But having said that, not all loans come with prepayment penalties. Contact your lender or read your loan contract to confirm whether or not you’ll be charged for prepaying. “
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Johnny Puckett
Answered on May 05, 2021
Johnny Puckett is a freelance writer and automotive expert. He has contributed content to a number of some of the largest online publications, aftermarket automotive manufacturers’ sites, and automotive informational sites. His experience in the automotive and information fields informs his writing at Jerry. His automotive interests bleed into his free time, where he enjoys modifying his favorite cars and woodworking.
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