KRS 286.4-530: Basic, default, and deferment charges -- Refund upon prepayment --

Reduction when installments in default -- Charges computed on unpaid

balance -- Principal may include balance on prior loan -- Loan entered into

within 10 days of another loan -- Restrictions on interest and consideration.

(1) (a) Every licensee may lend any sum of money not exceeding fifteen thousand

dollars ($15,000), excluding charges, and may charge, contract for, and

receive on any loan charges not in excess of:

1. If the original principal amount of the loan, excluding charges, does not

exceed five thousand dollars ($5,000), three percent (3%) per month on:

a. The original principal amount of the loan; and

b. Any charges, including fees, costs, expenses, or other amounts ,

authorized by this subtitle on the loan contract;

2. If the original principal amount of the loan, excluding charges, exceeds

five thousand dollars ($5,000) but does not exceed ten thousand dollars

($10,000), two and forty-two hundredths percent (2.42%) per month on:

a. The original principal amount of the loan; and

b. Any charges, including fees, costs, expenses, or other amounts,

authorized by this subtitle on the loan contract; and

3. If the original principal amount of the loan, excluding charges, exc eeds

ten thousand dollars ($10,000), two and one -fourth percent (2.25%) per

month on:

a. The original principal amount of the loan; and

b. Any charges, including fees, costs, expenses, or other amounts,

authorized by this subtitle on the loan contract.

(b) The charges authorized under paragraph (a) of this subsection shall be

computed in advance at the agreed rate on scheduled unpaid principal

balances of the cash advance on the assumpti on that all scheduled payments

will be made when due.

(c) The total amount of the precomputed charges under paragraph (b) of this

subsection shall be added to the original cash advance and other charges,

including fees, costs, expenses, or other amounts, a uthorized by this subtitle

on the loan contract, and the resulting sum shall become the face amount of

the note.

(d) Every loan payment may be applied to the face amount of the note until the

loan contract is paid in full.

(2) For the purposes of computation under subsection (1) of this section:

(a) Whether at the maximum rate or less:

1. A month shall be that period of time from any date in a month to the

corresponding date in the next month and, if there is no corresponding

date in the next month, then to the last day of that month; and

2. A day shall be considered one -thirtieth (1/30) of a month when the

computation is made for a fraction of a month; and

(b) The portion of the charges applicable to any particular monthly installment

period, as originally scheduled or following a deferment, shall bear the same

ratio to the total charges, excluding any adjustments made pursuant to

subsection (3) of this section, as the balance scheduled to be outstanding

during that monthly period bears to the sum of all monthly balances scheduled

originally by the loan contract.

(3) For any loan contract, a licensee and borrower may agree:

(a) On a first installment date that is not more than fifteen (15) days more than

one (1) month; and

(b) That the amount of the first ins tallment may be increased by one -thirtieth

(1/30) of the portion of the charges applicable to a first installment period of

one (1) month for each extra day.

(4) If one -half (1/2) or more of any installment remains unpaid more than seven (7)

days after it is due, a licensee may charge and collect a default charge not exceeding

two cents ($0.02) for each dollar of the scheduled installment, and this charge may

be collected for each full month the installment remains unpaid.

(5) (a) If the payment of all whol ly unpaid installments on which no default charge

has been collected is deferred one (1) or more full months, a licensee may

charge and collect a deferment charge not exceeding two cents ($0.02) for

each one dollar ($1) of the sum of the installments so de ferred, multiplied by

the number of months the maturity of the contract is extended, except the

number of months extended shall not exceed the number of installments

which are due and wholly unpaid or due within fifteen (15) days from the date

of deferment.

(b) The deferment charge may be collected at the time of deferment or at any time

thereafter.

(c) Any payment received at the time of deferment may be applied first to the

deferment charge and the remainder, if any, applied to the unpaid balance of

the loan contract, except if the payment is sufficient to pay, in addition to the

appropriate deferment charge, any installment which is in default and the

applicable default charge, it shall be first so applied and that installment shall

not be deferred or subject to the deferment charge.

(d) At the time a deferment is made, the borrower shall be given a statement or

receipt showing:

1. The amount of the deferment charge;

2. The date and amount of the next scheduled payment; and

3. The number of remaining scheduled payments.

(6) (a) Except as otherwise provided in this subsection, if a loan contract is prepaid in

full by cash, a new loan, or otherwise before the final installment date, the

portion of the charges applicable to the full installment periods followi ng the

installment date nearest the date of prepayment shall be refunded.

(b) Any default or deferment charges which are due and unpaid on the loan

contract may be deducted from the refund required under this subsection.

(c) Any tender made by a borrower o r at his or her request of an amount equal to

the unpaid balance less the refund required under this subsection shall be

accepted by a licensee in full payment of the loan contract.

(d) If judgment is obtained before the final installment date, the contrac t balance

shall be reduced by the refund which would be required for prepayment in full

as of the date judgment is obtained.

(e) A licensee shall not be required to make a refund:

1. Of less than one dollar ($1); or

2. For partial prepayments.

(7) If two (2) or more full installments are in default for one (1) full month or more at

any installment date and if the loan contract so provides, a licensee may reduce the

contract balance by the refund or credit which would be required for prepayment in

full on the installment date. Thereafter, in lieu of charging, collecting, or receiving

charges as provided in subsections (1) to (6) of this section, charges may be

charged, collected, and received as provided in subsection (8) of this section until

the loan contract is fully paid.

(8) (a) In lieu of computing and collecting charges as provided in subsections (1) to

(6) of this section, a licensee may contract for, collect, and receive on loans of

fifteen thousand dollars ($15,000) or less charges as permitt ed in subsection

(1) of this section computed on the unpaid balance of the loan from time to

time outstanding.

(b) The charges permitted under paragraph (a) of this subsection shall not be paid,

deducted, received in advance, or compounded, but shall be co mputed,

collected, and received only on unpaid balances for the time actually

outstanding.

(c) The definition of a month and of a day in subsection (2) of this section shall

apply for the purposes of the computations under this subsection.

(9) If part or a ll of the consideration for a loan contract is the unpaid principal balance

of a prior loan with the same licensee, then the principal amount payable under the

new loan may include the balance remaining on the prior loan after giving the

refund required by subsection (6) of this section.

(10) (a) In addition to the charges provided for in this subtitle, no further charge or

amount whatsoever for any examination, service, brokerage, commission,

expense, fee, bonus, or other thing shall be directly or indirec tly charged,

contracted for, or received, for an extension of credit under this subtitle

except:

1. The lawful fees actually and necessarily paid out by the licensee to any

public official for filing, recording, or releasing in any public office any

instrument securing the loan;

2. The identifiable charge of premium for insurance provided for in KRS

286.4-560; and

3. Fees for noting or releasing a lien on or transferring a certificate of title

to any motor vehicle offered as security for a loan made under t his

subtitle.

(b) If any amount in excess of the amounts authorized by this subtitle is charged,

contracted for, or received, except as the result of an accidental or bona fide

error, the lender shall have no right to collect or receive any charges

whatsoever.

(11) (a) A licensee shall not induce or permit a person to become obligated to the

licensee, directly or contingently, or both under any loan contract entered into

within ten (10) days of the origination of another loan contract with the same

person f or the purpose or with the result of obtaining charges greater than

would otherwise be permitted by this subtitle.

(b) For a second or subsequent loan made by a licensee to any person outside of

the ten (10) day period referenced in paragraph (a) of this s ubsection, the

licensee shall not be required to limit the loan charges to the aggregate

amount of what the loans combined would dictate under this subtitle.

(12) A licensee shall not directly or indirectly charge, contract for, or receive any

interest or consideration greater than the lender would be permitted by law to

charge if the lender were not a licensee:

(a) Upon any loan in the amount or of the value of more than fifteen thousand

dollars ($15,000), excluding charges; or

(b) In any case in which the licensee permits any individual as borrower, indorser,

guarantor, or surety for any borrower, or otherwise, to owe on any loan or

loans directly or contingently, or both, to the licensee at any time the sum of

more than fifteen thousand dollars ($15,000), excluding charges.