{"id":373558,"date":"2016-03-31T21:35:22","date_gmt":"2016-04-01T02:35:22","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/state\/kentucky-law\/kentucky-interest-rates-laws.html"},"modified":"2016-06-20T19:48:47","modified_gmt":"2016-06-21T00:48:47","slug":"kentucky-interest-rates-laws","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/state\/kentucky-law\/kentucky-interest-rates-laws.html","title":{"rendered":"Kentucky Interest Rates Laws"},"content":{"rendered":"\n
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Kentucky Interest Rates Laws<\/h1>\n
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Created by FindLaw’s team<\/a> of legal writers and editors<\/i><\/p>\n\n | Last updated\n

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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Sometimes, consumers are tricked into agreeing to high interest rates based on advertisements for 0% interest or no fees that hide the real interest rate in small print and complicated wording. However, consumers have legal rights and protections. How high of an interest rate can a company charge? What about a mortgage<\/a> lender? There are also protections against excessive charges and interest rates on home loans.<\/p>\n

The table below describes the interest rate laws<\/a> in Kentucky.<\/p>\n\n
Code Sections<\/b><\/td>\nKentucky Revised Statutes Chapter 360 \u2013 Interest and Usury<\/a><\/td>\n<\/tr>
Legal Maximum Rate of Interest<\/b><\/td>\nThe maximum legal interest rate<\/a> in Kentucky is 8% unless there\u2019s an agreement otherwise. Even then, parties can\u2019t agree to a rate more than 4% above the discount rate of the Federal Reserve Bank<\/a> or 19%, whichever is less, for a principal amount of $15,000 or less, or any rate for a loan of $15,000 or more as provided by the contract.<\/td>\n<\/tr>
Interest Rates on Judgments<\/b><\/td>\nGenerally, the interest rate on court judgments is 12%<\/a>. However, if the obligation came from a written contract specifying a different interest rate, then contract rate applies, whether it\u2019s lower or higher.<\/td>\n<\/tr>
High-Cost Home Loans<\/b><\/td>\nKentucky law attempts to address predatory lending<\/a> by limiting residential mortgages of $15,000 to $200,000 with closing costs over $3,000 or 6% of the total loan. Lenders can\u2019t charge prepayment penalties<\/a> unless an offer without a prepayment penalty is provided to the borrower in writing. If rejected, the penalty can\u2019t be over3% for the first year or 2% for the second year or 1% of the third year or anything after three years.
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\nAlso lender\u2019s can charge feeds to modify or renew a high-cost home loan or defer any payments unless the fees are less than half of any fees to refinance or the borrower is in default and it\u2019s in the borrower\u2019s best interest. Late payments can\u2019t be more than 5% of the amount due or $10 (whichever is greater). Also, high-cost home loans can\u2019t be made unless the lender reasonably believes the borrower can pay a home loan, but not having more than 50%of their gross income payable as debts or having liquid assets<\/a> to pay 50% of the principal of the loan.
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\nLenders must also make available an audio-visual media explanation of the borrowers’ rights<\/a> and responsibilities and not make an unfair or oppressive mandatory arbitration clause as part of the loan. There are many other aspects of this law meant to protect borrowers from unreasonable mortgages and high foreclosure rates.<\/td>\n<\/tr>
Exceptions<\/b><\/td>\nThere are some exceptions to the usual maximum interest rates in Kentucky, including:
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Penalty for Unlawful Interest Rates (Usury)<\/b><\/td>\nKnowingly charging an interest rate greater than the law permits forfeits the entire interest of the debt, in addition, the borrower may recover twice the amount of interest<\/a> he or she has paid. However, there\u2019s a time limit to sue or statute of limitation<\/a> of two years from the time the usurious transaction occurred.
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\nLenders of high-cost home loans may have to change the terms of the loan or provide \u201cappropriate restitution\u201d such as reimbursing fees, interest, or other charges the lender made to return the borrower to the position they would\u2019ve been in had the mortgage been lawful to begin with.<\/td>\n<\/tr><\/tbody><\/table>\n

If you feel you\u2019re being charged an unlawful interest rate on any product or loan in Kentucky, you should speak to an experienced Kentucky consumer protection lawyer<\/a>. There may be some options to negotiate a better rate or sue for your financial losses.<\/p>\n

Note:<\/i><\/b> State laws change regularly, contact an attorney or conduct your own legal research to verify any laws you\u2019re researching.<\/i><\/p>\n

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