Rhode Island's law on prepayment penalties requires lenders to inform borrowers that...

Rhode Island law stipulates that lenders must inform borrowers about prepayment penalties related to their loans. According to this law, borrowers are allowed to pay off their loan without incurring any penalties after one year. This provision is designed to give borrowers the flexibility and freedom to settle their debts early without facing additional financial burdens, which can be particularly beneficial if interest rates decrease or if their financial situation improves.

By ensuring that borrowers are aware of this right, the law aims to promote transparency and fairness in lending practices. Borrowers can make educated decisions regarding their loan repayment strategies, which can ultimately save them money in interest payments. This understanding also supports consumer confidence and aligns with broader consumer protection goals.

The other options provided either misrepresent the terms of prepayment penalties in Rhode Island or suggest unnecessary limitations around loan repayment that do not align with the state's consumer protection laws regarding prepayment.