What condition must Rhode Island law meet regarding prepayment penalties?

In Rhode Island, the law restricts prepayment penalties in a way that allows them to exceed 2% only if the borrower provides consent. This means that lenders do have some flexibility concerning prepayment penalties, but this flexibility is contingent upon obtaining the borrower's agreement. This provision is important for ensuring that borrowers are aware of and accept any potential penalties they might face for paying off their loans early, which can help prevent misunderstandings and fairness in lending practices.

This context emphasizes the need for transparency in the lender-borrower relationship and protects borrowers from unexpectedly high fees that could arise from prepayment. By requiring borrower consent, the law aims to maintain a balance between the interests of lenders and the rights of borrowers, ensuring that borrowers are not caught off guard by unfair or excessive penalties.