Kentucky interest rates laws are enumerated under Title XXIX, Chapter 360, Section 010 et seq. of Kentucky Statutes. Section 360.010 prescribes the legal rate of interest in the state as eight percent (8%) per annum. However, certain limitations are set in determining the interest rates if the parties to a contract agree upon in writing. Interest rate can be in excess of eight percent (8%) per annum, but must not exceed four percent (4%) in excess of the discount rate of Federal Reserve Bank, or nineteen percent (19%) whichever is less. The rate of interest can be exceeded if the principal amount due upon any contract is in excess of $15,000.
Pursuant to Section 360.020 any person who charges a greater interest than allowed by Section 360.010 (lawful interest rate), shall be deemed a forfeiture of the entire interest agreed upon by the parties. Furthermore, any person who pays a greater rate of interest can bring an action in the nature of debt to recover twice the amount of the interest paid.
According to Section 360.040 a judgment rendered by a court should bear an interest rate of twelve percent (12%). Apart from this, if parties agreed upon for an interest rate on any principal amount, then the judgment shall bear interest rate in accordance with the agreed interest rate for the principal amount whether it is lesser or greater than twelve percent (12%).
Pursuant to Section 360.010 (2), any state or national bank may charge $10 for any loan negotiated at the bank, even if the legal interest does not amount to that sum. According to Title XXV, Chapter 286, of Section 286.6-465, no loan shall be advanced to any member in an aggregate amount in excess of ten percent of the credit union’s capital.
Pursuant to Section 286.4-530 of Kentucky Financial Services Code, every licensee who lends money not exceeding $ 15000 may charge an interest not exceeding three percent (3%) per month on that part of the unpaid principal balance not in excess of one thousand dollars ($1,000) and two percent (2%) per month on that part of the unpaid principal balance exceeding one thousand dollars ($1,000) but not exceeding three thousand dollars ($3,000). However, any person who lends an original principal amount of loan money not exceeding $3000 may charge interest not in excess of two percent (2%) per annum.
KRS § 360.010
Legal interest rate — Agreement for higher rate — Minimum charge for negotiated bank loan.
(1) The legal rate of interest is eight percent (8%) per annum, but any party or parties may agree, in writing, for the payment of interest in excess of that rate as follows: (a) at a per annum rate not to exceed four percent (4%) in excess of the discount rate on ninety (90) day commercial paper in effect at the Federal Reserve Bank in the Federal Reserve District where the transaction is consummated or nineteen percent (19%), whichever is less, on money due or to become due upon any contract or other obligation in writing where the original principal amount is fifteen thousand dollars ($15,000) or less, and (b) at any rate on money due or to become due upon any contract or other obligation in writing where the original principal amount is in excess of fifteen thousand dollars ($15,000); and any such party or parties, and any party or parties who may assume or guarantee any such contract or obligation, shall be bound for such rate of interest as is expressed in any such contract, obligation, assumption, or guaranty, and no law of this state prescribing or limiting interest rates shall apply to any such agreement or to any charges which pertain thereto or in connection therewith; provided, however, nothing herein contained shall be construed to amend, repeal, or abrogate any other law of this state pertaining to any particular types of transactions for which the maximum rate of interest is specifically prescribed or provided.
(2) Any state or national bank may charge ten dollars ($10) for any loan negotiated at the bank in this state, even if the legal interest does not amount to that sum.
KRS § 360.020
Civil penalty for charging excessive interest — Partial payment applied first to interest.
(1) The taking, receiving, reserving, or charging a rate of interest greater than is allowed by KRS 360.010, when knowingly done, shall be deemed a forfeiture of the entire interest which the note, bill, or other evidence of debt carries with it, or which has been agreed to be paid thereon. In case the greater rate of interest has been paid, the person by whom it has been paid, or his legal representatives, may recover, in an action in the nature of an action of debt, twice the amount of the interest thus paid from the creditors taking or receiving the same: provided, that such action is commenced within two (2) years from the time the usurious transaction occurred.
(2) Partial payment on a debt bearing interest shall be first applied to the interest then due.
KRS § 360.040
Interest on judgment.
A judgment shall bear twelve percent (12%) interest compounded annually from its date. A judgment may be for the principal and accrued interest; but if rendered for accruing interest on a written obligation, it shall bear interest in accordance with the instrument reporting such accruals, whether higher or lower than twelve percent (12%). Provided, that when a claim for unliquidated damages is reduced to judgment, such judgment may bear less interest than twelve percent (12%) if the court rendering such judgment, after a hearing on that question, is satisfied that the rate of interest should be less than twelve percent (12%). All interested parties must have due notice of said hearing.
KRS § 360.010
(2) Any state or national bank may charge ten dollars ($10) for any loan negotiated at the bank in this state, even if the legal interest does not amount to that sum.
KRS § 286.6-465
Maximum loan.
No loan shall be made to any member in an aggregate amount in excess of ten percent (10%) of the credit union’s capital.
KRS § 286.4-530
Basic, default and deferment charges — Prohibition against division of loan and excessive charges.
(1) Every licensee may lend any sum of money not exceeding fifteen thousand dollars ($15,000), excluding charges, and may charge, contract for and receive thereon charges not in excess of three percent (3%) per month on that part of the unpaid principal balance not in excess of one thousand dollars ($1,000) and two percent (2%) per month on that part of the unpaid principal balance exceeding one thousand dollars ($1,000) but not exceeding three thousand dollars ($3,000); provided, however, that in any loan wherein the original principal amount of the loan (face amount less precomputed charges) exceeds three thousand dollars ($3,000), the licensee may not charge at a rate per month in excess of two percent (2%) per month on the unpaid balances of the principal. Such charges shall be computed in advance at the agreed rate on scheduled unpaid principal balances of the cash advance on the assumption that all scheduled payments will be made when due. The total amount of such precomputed charges shall be added to the original cash advance and the resulting sum shall become the face amount of the note. Every payment may be applied to the combined total of the cash advance and precomputed charges until the contract is paid in full.
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