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Kansas Interest Rates Laws

Most of us need to take a loan out at some point in our lives to make a big purchase, from a car to college tuition, as well as for a home or a farm. Whatever the reasons behind our loans, we need to be aware of the interest rates that apply to the various debts in our lives.

Credit cards often entice consumers with low 0% interest advertisements, which hide the real interest rate in small print and complicated legalese words. If you find yourself with a debt problem, you may also want to review budgeting options to rein in debt or read articles about bankruptcy options.

The chart below lists the legal interest rates and interest rate laws in Kansas.

Code Sections Kansas Statutes Chapter 16, Article 2: Interest and Charges
Legal Maximum Rate of Interest The maximum legal rate of interest is 10%, when no other rate is agreed upon. The maximum rate at which parties can contract, which is higher, is 15% per year, unless otherwise specifically authorized to be higher by law.
Interest Rates on Judgments Kansas law states that the interest rate on judgments will be 4% above the federal discount rate (the charge on loans to banks by the Federal Reserve Bank) as of the July 1st preceding the judgment. The Kansas Secretary of State publishes the judgment rate on its website. For July 1, 2014 to June 30, 2015 the rate was 4.75%, as it had been for the past four years since July 1, 2010.

Note that when the judgment is based on a contract, then the contract rate controls.
Exceptions Several different categories of loans aren’t limited by the contracted legal maximum interest rate of 15%, specifically:
  • Business and agricultural loans
  • Retirement plans that are considered “qualified plans” by the Internal Revenue Code Section 401(a)
  • Note secured by a real estate mortgage or a contract for deed to real estate, although keep in mind that first mortgage loans for personal, family, or household purposes are subject to the Uniform Consumer Credit Code
Penalty for Unlawful Interest Rate The penalty for usury or an unlawful interest rate is to forfeit all interest and have the amount of interest contracted for in excess of the legal amount deducted from the principal and lawful interest due. A defendant will also have to pay the borrower’s reasonable attorney fees.

If you think a loan you’ve taken out may be charging you an unlawful amount of interest, you should speak to speak to an experienced Kansas consumer protection lawyer to learn about your legal options.

Note: State laws change constantly. Please contact a banking & finance lawyer or conduct your own legal research to verify these interest rate laws.

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