UT SB0230

Creditors are prohibited from charging prepayment penalties on closed-end consumer credit debt, eliminating the previous exception that allowed prepayment fees on subordinate lien dwelling loans when debtors chose a lower interest rate option

"Prepayment penalty" is defined as a contingent fee assessed for paying debt before the scheduled due date, but explicitly excludes prepaid finance charges

Prepaid finance charges on closed-end consumer credit debt are nonrefundable upon prepayment unless the parties expressly agree otherwise, removing the previous 5% cap and pro rata rebate requirements

Third-party costs, charges, or fees paid to set up credit are not subject to rebate to the borrower unless the creditor receives a rebate as a result of the prepayment

Effective date: May 6, 2026