SENATE BILL No. 470 An Act concerning consumer credit code; maximum finance charge on consumer credit
sales; amending K.S.A. 1997 Supp. 16a-2-201 and repealing the existing section. Be it enacted by the Legislature of the State of Kansas:

    Section 1. K.S.A. 1997 Supp. 16a-2-201 is hereby amended to read
as follows: 16a-2-201. (1) With respect to a consumer credit sale, other
than a sale pursuant to open end credit, a seller may contract for and
receive a finance charge not exceeding that permitted by this section.

    (2) The finance charge, calculated according to the actuarial method,
may not exceed the equivalent of the following:

    The total of:

    (a) Twenty-one percent per year on that part of the unpaid balance
of the amount financed which is $1,000 or less;

    (b) fourteen and forty-five hundredths percent per year on that part
of the unpaid balance of the amount financed which is more than $1,000.

    (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 of the finance charge does not exceed that permitted by
this section. If the sale is precomputed:

    (a) The finance charge may be calculated on the assumption that all
scheduled payments will be made when due, and the fact that payments
are made either before or after the due date does not affect the amount
of finance charge which the creditor may charge or receive; and

    (b) the effect of prepayment is governed by the provision on rebate
upon prepayment.

    (4) For the purposes of this section, the term of a sale agreement
commences with the date the credit is granted or, if goods are delivered
or services performed 10 days or more after that date, with the date of
commencement of delivery or performance.

    (5) Subject to classifications and differentiations the seller may rea-
sonably establish, the seller may make the same finance charge on all
amounts financed within a specified range. A finance charge so made
does not violate subsection (2) if:

    (a) When applied to the median amount within each range, it does
not exceed the maximum permitted by subsection (2); and

    (b) when applied to the lowest amount within each range, it does not
produce a rate of finance charge exceeding the rate calculated according
to paragraph (a) by more than 8% of the rate calculated according to
paragraph (a).

    (6) Notwithstanding subsection (2), the seller may contract for and
receive a minimum finance charge of not more than $5 when the amount
financed does not exceed $75, or not more than $7.50 when the amount
financed exceeds $75.

    (7) Notwithstanding any other provision of this section, with respect
to a consumer credit sale other than open end credit, the seller may
contract for and receive a finance charge not exceeding that agreed to by
the consumer.

    (8) Rebate upon prepayment:

    (a) Except as provided for in this section, upon prepayment in full of
a precomputed consumer credit transaction, the creditor shall rebate to
the consumer an amount not less than the amount of rebate provided in
subsection (b), paragraph (1), or redetermine the earned finance charge
as provided in subsection (b), paragraph (2), and rebate any other un-
earned charges including charges for insurance. The rebate for charges
for insurance shall be as prescribed by statute, rules and regulations and
administrative interpretations by the administrator. If the rebate other-
wise required is less than $1, no rebate need be made.

    (b) The amount of rebate and redetermined earned finance charge
shall be as follows:

    (1) The amount of rebate shall be determined by applying, according
to the actuarial method, the rate of finance charge which was required to
be disclosed in the transaction:

    (i) Where no deferral charges have been made in a transaction, to the
unpaid balances for the actual time remaining as originally scheduled for
the period following prepayment; and

    (ii) where deferral charges have been made in a transaction, to the
unpaid balances for the actual time remaining as extended by deferral for
the period following prepayment.

    The time remaining for the period following prepayment shall be either
the full days following prepayment; or both the full days, counting the
date of prepayment, between the prepayment date and the end of the
computational period in which the prepayment occurs, and the full com-
putational periods following the date of prepayment to the scheduled due
date of the final installment of the transaction.

    (2) The redetermined earned finance charge shall be determined by
applying, according to the actuarial method, the rate of finance charge
which was required to be disclosed in the transaction to the actual unpaid
balances of the amount financed for the actual time the unpaid balances
were outstanding as of the date of prepayment. Any delinquency or de-
ferral charges collected before the date of prepayment do not become a
part of the total finance charge for purposes of rebating unearned charges.

    (c) Upon prepayment, but not otherwise, of a consumer credit trans-
action whether or not precomputed, other than a consumer lease, a con-
sumer rental purchase agreement, or a transaction pursuant to open end
credit:

    (1) If the prepayment is in full, the creditor may collect or retain a
minimum charge not exceeding $5 in a transaction which had an amount
financed of $75 or less, or not exceeding $7.50 and in a transaction which
had an amount financed of more than $75, if the finance charge earned
at the time of prepayment is less than the minimum allowed pursuant to
this subsection.

    (2) If the prepayment is in part, the creditor may not collect or retain
a minimum finance charge.

    (d) For the purposes of this section, the following defined terms apply:

    (1) ``Computational period'' means the interval between scheduled
due dates of installments under the transaction if the intervals are sub-
stantially equal or, if the intervals are not substantially equal, one month
if the smallest interval between the scheduled due dates of installments
under the transaction is one month or more, and otherwise one week.

    (2) The ``interval'' between specified dates means the interval between
them including one or the other but not both of them. If the interval
between the date of the transaction and the due date of the first scheduled
installment does not exceed one month by more than fifteen days when
the computational period is one month, or eleven days when the compu-
tational period is one week, the interval may be considered by the creditor
as one computational period.

    (e) This section does not preclude the collection or retention by the
creditor of delinquency charges.

    (f) If the maturity is accelerated by any reason and judgment is ob-
tained, the consumer is entitled to the same rebate as if payment had been
made on the date maturity is accelerated.

    (g) Upon prepayment in full of a precomputed consumer credit trans-
action by the proceeds of consumer credit insurance, the consumer or the
consumer's estate is entitled to the same rebate as though the consumer
had prepaid the agreement on the date the proceeds of the insurance are
paid to the creditor, but no later than ten business days after satisfactory
proof of loss is furnished to the creditor.

    Sec. 2. K.S.A. 1997 Supp. 16a-2-201 is hereby repealed.

    Sec. 3. This act shall take effect and be in force from and after its
publication in the statute book.

I hereby certifiy that the above Bill originated in the
Senate, and passed that body

__________________________________

Senate concurred in
House amendments__________________________

__________________________________

President of the Senate.

__________________________________

Secretary of the Senate.

Passed the House
as amended __________________________

__________________________________

Speaker of the House.

__________________________________

Chief Clerk of the House.

Approved __________________________

__________________________________

Governor.