is prepayment penalty legal in alabama?

Mork, such penalties are not legal in the state & are prohibited as per Alabama Consumer Finance Act.

"is prepayment penalty legal in alabama?"
I read somewhere that it would be legal if the bank is chartered in a state where prepayment penalties are legal. And many banks do charter themselves for this very reason in a state where they are legal. But you need to confirm with the bank to know if they charge such penalty or not.

CB

Hi Mork,

Welcome to Mortgagefit discussion board.

If you would like to know more about prepayment penalties then please go through this under mentioned page:

http://www.mortgagefit.com/prepayment-penalty.html

Thanks
Blue

Prepayment penalty is not legal in Alabama.

I was wondering if it is legal in Florida?

Hi Mollienhuber,

A prepayment penalty is legal in Florida.

what is prepayment penalty?

Hi George,

Lenders often charge borrowers with an amount for repaying the loan at an early period before the actual loan term gets over. This concept of charging money is known as prepayment penalty. The lender charges the amount to recover the loss in interest payment on account of the prepayment or early payment of the loan.

It it legal for an individual owner financer to charge a prepayment penalty in Alabama because of the tax burden he would face in being paid off a lump sum.