§ 16a-2-401 — Finance charge for consumer loan; prepaid finance charges

(1) For any consumer loan incurred pursuant to open-end credit, including, without limitation, a loan pursuant to a lender credit card, a lender may charge a finance charge at any rate agreed to by the parties, subject, however, to the limitations on prepaid finance charges set forth in subsection (4).
(2) For any consumer loan incurred pursuant to closed-end credit, a lender may charge a periodic finance charge, calculated accordingly to the actuarial method, not to exceed 36% per annum.
(3) This section does not limit or restrict the manner of calculating the finance charge, whether by way of add-on, discount or otherwise, so long as the rate and the amount of the finance charge does not exceed that permitted by this section.
(4) Prepaid finance charges on consumer loans are limited to an amount not to exceed the lesser of 2% of the amount financed or $300.
Prepaid finance charges permitted under this subsection are in addition to finance charges permitted under subsection (1) and (2), as applicable. Prepaid finance charges permitted under this subsection are fully earned when paid and are non-refundable, unless the parties agree otherwise in writing.
(5) If, within 12 months after the date of the original loan, a lender or a person related to the lender refinances a loan with respect to which a prepaid finance charge was payable to the same lender pursuant to subsection (4), then the following apply:
(a) If a prepaid finance charge with respect to the original loan was payable to the lender pursuant to subsection (4), then the aggregate amount of prepaid finance charges payable to the lender or any person related to the lender with respect to the new loan may not exceed the lesser of 2% of the additional amount financed or $300.
(b) For purposes of this subsection, "additional amount financed" means the difference between:
(i) The amount financed for the new loan, less the amount of all costs incurred in connection with the new loan which are not included in the prepaid finance charges for the new loan; and
(ii) the unpaid principal balance of the original loan.
(6) For any period in which a finance charge is due on a consumer loan pursuant to open-end credit, the parties may agree on a minimum amount.
(7) This section does not apply to a payday loan governed by K.S.A. 16a-2-404, and amendments thereto.

Legislative History

L. 1973, ch. 85, § 27; L. 1974, ch. 91, § 1; L. 1975, ch. 126, § 1; L. 1980, ch. 76, § 9; L. 1980, ch. 77, § 3; L. 1981, ch. 94, § 3; L. 1982, ch. 94, § 1; L. 1983, ch. 79, § 3; L. 1985, ch. 82, § 3; L. 1986, ch. 90, § 1; L. 1988, ch. 85, § 6; L. 1988, ch. 86, § 3; L. 1988, ch. 87, § 2; L. 1993, ch. 200, § 7; L. 1995, ch. 54, § 2; L. 1999, ch. 107, § 15; L. 2000, ch. 27, § 3; L. 2000, ch. 159, § 1; L. 2024, ch. 6, § 49; January 1, 2025.