Utah modifies consumer credit code to prohibit prepayment penalties with specific housing loan exceptions and clarify debtor rebate rules

Utah law now prohibits creditors from charging prepayment penalties on closed-end consumer credit debts, with an exception for certain dwelling-secured loans where lower interest rates are offered in exchange for a prepayment fee. The legislation also specifies how unearned finance charges and prepaid fees are calculated during early repayment and clarifies that debtors are not entitled to third-party fee rebates unless the creditor receives one.

Consumers paying off closed-end loans early are legally protected from unexpected penalty fees unless they choose a specific subordinate dwelling loan contract with an alternative rate structure, directly impacting total loan payoff costs and refinancing terms.