I realize this subject has been addressed before and I have searched and read the old posts. However, I didn't see anything on the minimum charge or maybe I missed it. First, to clarify once again, the maximum rate is 24% under KRS 290. Is that 24% daily rate or 24% APR. The reason I am asking is because I just changed banks, and it is the new bank's interpretation that it does not apply to APR which can go to whatever amount needed so long as the rate is under 24%. Is this correct? The reason that the rate tends to go over 24% in this situation is due to the minimum charge applied to all loans of $7.50. I am told that somewhere in KRS , it states that a bank can charge a min. charge of $7.50 on any loan. In which case, the argument is that if the $7.50 causes a small loan to have a high APR then that is ok so long as it is only $7.50 that you are charging. I am wondering if the $7.50 statement is made in some other statute and does not apply to 290. Can someone once again please clarify this for me?
Thank You!

KRS 290 states the maximum interest rate as 2% per month. The statute never mentions 24%. The statute also does not define what is included in interest (Is it interest only or is it all fees?)A transaction with an effective rate that exceeds 2% per month (24%) is very aggresive.

KRS 290 does not address the issue of a minimum charge. Minimum charges are addressed in other KY statutes, such as KRS 360.010. That statute provides for a $10.00 minimum charge. A reference to a $7.50 minimum charge appears in Truth in Lending, but does not have any bearing on your question.

Bottom line: A transaction with a $7.50 minimum charge that results in a rate that exceeds 2% per month appears to violate KRS 290. Such a transaction would be permissible under KRS 360.010.

Does Pegasus have any seminars on KY Usury scheduled in the next year?

Reading over this again, I went back and pulled the statutes to read them again as well. Please explain to me how this would be permissible under KRS 360? I see that $10.00 is allowed to be charged under KRS 360 but it doesn't say it can be charged even if the rate exceeds what is allowed. And, the rate allowed under 360 is 8% unless agreed in writing (and it would be) at a rate not to exceed 4% over the discount rate of 90 day commercial paper at the Federal Reserve where the transaction is consummated or 19% whichever is less. So, if the $10.00 or $7.50 caused the rate to go over the above, how would that be permissible?
Thank you for your time.

It wouldn't be permissible under KRS 290 if it resulted in the rate exceeding 2% per month, but your note could reference KRS 360 instead and be all right.

After all the discussion on Kentucky's usury laws I am still confused. If I under stand correctly KRS 290 is for consumer loans $15,000 or less not tied to real estate and limits the interest rate to 2% per month? What are the laws for loans that do not fall within these qualifications? Any assistance is appreciated.

I am not sure about that, but Pegasus does have a KY usuary law seminar in May in various locations. Visit the KBA website for details.

MarieR, thanks for replying. I appreciate your help. I have seen that seminar on the KBA sight and definately plan on attending. However, I am scheduled to do a usury audit this month and need guidance on how to audit loans that don't fit into KRS 290. If anyone else has any advice I would appreciate it.
Thanks!

Generally, loans outside the parameters that you mention are exempt from usury limits.

Thanks Jack!