Kentucky Payday Loan Laws

The state of Kentucky is attempting to completely banish payday loans. State representatives, along with state Government officials, are battling to make these loans illegal. According to Kentucky state law 286.9-010 et seq, there are guidelines that each payday loan establishment must follow.

• A maximum percentage rate of 15% cannot be exceeded on loans of $100 or more
• The amount loaned in a 14 day period cannot exceed $500
• The consumer can obtain more than one loan as long as the balance of all combined does not exceed $500
• An establishment may not have more than one loan at a time with one single customer
• The APR cannot exceed 459% on a 14 day loan
• The minimum loan term is 14 days and the maximum loan term permitted is 60 days
• Only one NSF fee may be charged for each defaulted loan. Criminal action can be taken

In Kentucky, they have implemented a statewide database that includes all of the payday loans that are given. Any payday loan establishment can go into this system to see if a customer has any other loans out with other establishments. This system is in place to prevent any unlawful loans from being granted.

Rollover loans are not permitted in the state of Kentucky. All loans must be repaid on time. Extensions are not to be given. If an extension is offered by a payday loan lender, they are defrauding the system already in place. There is no cooling off period. A borrower can take a second loan as long as the total of both loans does not exceed $500. This means that as soon as one is paid off, a borrower can turn right around and apply for another, or obtain a second if they have not exceeded the $500 limit.

Some state officials wanted to pass a bill to allow a payday loan facility to charge up to 36% interest. This bill failed by a small margin in 2011. Instead of attempting to increase the interest percentage rate that can be charged, Kentucky is fighting a hard battle to do away with payday loans completely. These fees are often referred to as service fees instead of interest fees.

Kentucky also regulates the way that a loan company can advertise. These strict regulations prevent borrowers from being defrauded. It also protects them from being scammed or falling victim to a non-licensed facility.

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