Posts Tagged ‘Kentucky payday loan laws’

Kentucky Payday Loan Laws

Kentucky payday loan laws have imposed certain legal restrictions on lenders when it comes to issuing, approving, and collecting short-term cash advances to the borrowers residing in the state of Kentucky. The Kentucky office of Financial Institutions regulates payday lending in this state. You can file a complaint with them if you find out that your lender is engaged in unfair and illegal practices and that they charging you more than the maximum limit allowed in this state. You can file our complaint by giving a call at (800) 223-2579 or fax the complaint at (502) 573-8787. You can also send a written complaint to this address – 1025 Capital Center Drive, Suite 200 Frankfort KY 40601.

Collection Practices

Payday lenders are infamous for their aggressive collection practices. It is important to note that the Fair Debt Collection Practices Act applies in this state also. Besides that, Kentucky payday loan laws have also imposed certain legal restrictions. For example, no matter how long your payday loan account has been in collection status, lenders cannot file a criminal lawsuit against you. It means there is no risk of being sent to jail just because of nonpayment of payday debt. Always remember, in the state of Kentucky, the inability to pay off a debt because of poor financial position is not a criminal offence. Besides that, the laws also restrict lenders to charge just one-time NSF fee, that too, if a specific clause has been disclosed in the loan contract.

No Automatic Rollovers

One of the biggest risk factors of payday loans is that these loans are often automatically renewed or rolled over if the borrower fails to make the repayment in time. Because of this provision, the borrower is forced to pay interest (at often 3-digit APR) for the extended period of time. if the loan keeps on rolling for a couple of times, the outstanding debt can just get double or even triple, eventually pushing the borrower into a never-ending cycle of debt. It is really unfortunate to see that thousands of consumers in the United States of America are getting bankrupt just because they fail to get to out of this viscous cycle of debt. Having said that, you are lucky if you are a resident of Kentucky because Kentucky payday loan laws strictly prohibit payday lenders from this unfair practice of automatic renewal or rollover of loans. If a borrower fails to meet the due date, the loan account will simply go to collections, which means no interest can be charged anymore.

No Provision For Mandatory Repayment Plan

Though rollovers are not allowed in Kentucky, the bad news is that unlike many other states, Kentucky does not make it mandatory for payday lenders to allow borrowers to pay off their debt in several monthly installments as part of an affordable repayment plan. It means even if your loan account is in collection status, you must pay in full in one lump-sum payment. However, even if a repayment plan is not mandatory, you can still request your lender for the same. It is just that it will entirely up to the lender to decide whether to agree or not to agree to your repayment plan proposals.

Maximum Amount Of Loan

Kentucky payday loan laws restrict the maximum amount of loan that a lender can issue to an individual borrower must not exceed $500. It is also important for you to keep in mind that an individual borrower cannot have more than two outstanding payday loans in his/her name at one time, but the aggregate total outstanding balance (even if you have borrowed two loans) can be a maximum of $500 only. It means if you have already taken a $200 of cash advance, another lender can now issue you a maximum of only $300 of another cash advance. There are certain legal consequences that lenders have to face if they issue cash advances more than the set maximum limit. But at the same time, it is important to note that the borrower will still be liable to repay at least the principal amount (without any interest or other finance charges) that he/she borrowed extra (in addition to the maximum limit allowed).

Interest Rate And Other Finance Charges

Kentucky Payday lenders can charge a maximum of $15 as interest on every $100 of cash advance issued for a 14-day period. Besides that, they can also charge up to $1 as database fee and $17.65 (on every $100 of loan) as other finance charges. This way, the maximum APR allowed in Kentucky can still be as high as 459% per annum. If you include finance charges, you will actually be paying up to 877% per annum in terms of rates and fees.

Repayment Period

As per Kentucky payday loan laws, the repayment period must not be less than fourteen days and more than sixty days.

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