Arizona Car Loan Laws

What an Arizona dealer contract can charge

A car bought on dealer credit in Arizona is a motor vehicle time sale, governed by Chapter 2.1 of Title 44 of the Arizona Revised Statutes. Section 44-291 makes interest lawful up to the maximum rate stated in the contract. There is no table of ceilings by model year, as some states have, so the rate on your retail installment contract is the one you agree to.

Federal law requires the contract to show the finance charge and the APR, and those two figures are what you compare. With no state ceiling as a backstop, get a quote from a bank or credit union first and test the dealer's offer with the car payment calculator. Title loans have their own rules, covered on our sister site's Arizona lending laws page.

Fees and taxes on an Arizona car purchase

• Doc fee. Arizona sets no cap on a dealer's document fee. Since 2021, a dealer that charges one must clearly and conspicuously say in its vehicle ads that a document fee will be charged (A.R.S. §44-1371).
• Transaction privilege tax. The state rate on retail sales is 5%, plus a 0.6% addition that runs through June 30, 2041, for 5.6% in all. Counties and cities add their own rates.
• Trade-in. The value of a vehicle you trade in is excluded from the taxable amount when the dealer deducts the allowance from the price before the sale is completed (A.R.S. §42-5001).
• Add-ons. Service contracts and GAP waivers are optional, and financing them raises the balance you pay interest on.

What happens if you fall behind in Arizona

Arizona law gives car buyers no right to cure, meaning no required notice and set period to catch up before the lender acts. After a default, the lender can take the car without a court order. A missed payment also lets the holder add a late charge of up to 5% of the installment once it is more than 10 days overdue. The repossession rules come from Arizona's version of Article 9 of the Uniform Commercial Code, in Title 47.

1. 1 Repossession. The lender may take the car after default without going to court, as long as there is no breach of the peace (A.R.S. §47-9609).
2. 2 Notice before the sale. The lender must send you a notice before it sells the car (§47-9611 and §47-9614).
3. 3 Redemption. Until the sale, you can recover the car by paying the full balance and the lender's reasonable costs (§47-9623).
4. 4 The deficiency. If the sale brings less than you owe, you usually owe the rest (§47-9615).

Our guides to repossession and the balance left after a sale explain how to respond. If you are on active duty, federal law bars repossession without a court order when a payment was made before your service began.

Where to check a lender and complain

Under A.R.S. §44-282, a company that buys retail installment contracts from sellers, or that creates or holds more than $50,000 in motor vehicle installment contracts, needs a sales finance company license from DIFI. Title lenders hold the same license. Banks and credit unions are supervised separately. You can ask DIFI whether a company that holds your contract is licensed before you deal with it.

Questions people ask