Obviously, one would need to review the contract in its entirety before rendering a formal legal opinion. That said, what would typically occur is that you would not get a discount for the interest due on the note; in other words, you would still pay the full amount due, with interest, as if you had made the payments over the course of 36 months. Thus, there would be no economic benefit in paying it off early. Insofar as "penalties" are concerned, there are typically restrictions as to the amount. For example, a $1 million penalty on a note for $10K would not likely be upheld. Please note that this is different than paying the full amount of interest that I just discussed.
If you do have the cash at hand, you might want to contact the seller and negotiate a lump sum payout. You'd reduce the amount of interest you would otherwise owe, and the seller would get the benefit of cash without the risk of non-payment.
-- Kenneth J. Ashman; KAshman@AshmanLawOffices.com
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