Kansas Payday Loan Law and Legislation

Kansas was among the first states to start regulating payday loans on the state level. The same legislature enacted in 1993 (and amended in 2004) still governs the payday lending industry in the state. Currently, certain restrictive changes are being discussed by Kansas legislative bodies, however, no new bills have passed in recent years so far.

Kansas Payday Lending Statutes

Kansas Statutes §16a-2-404 and §16a-2-405 contain all the information about payday lending and regulate the operation of all lending companies in the state. KSA 16a-2-404 is the major payday lending statute and KSA 16a-2-405 is related to military borrowers only. More legislative information about Kansas payday lending is provided by the Kansas Legislative Research Department.

A lender is obliged to keep track of all payday loan transactions. Moreover, Section 16a-2-404(4) in the Statute also requires that a payday lending contract was written in all the required by both parts languages; there is a special requirement to the type of print: 10 point bold face type for the following warning:

Kansas law does not permit licensed lenders and their affiliates to have more than two loans outstanding with a borrower at one time. Any amounts owed are not to be divided into multiple loans as a means of increasing fees paid to the lender.

Payday Loan Amount in Kansas

• According to the state laws of Kansas, a lender is not allowed to provide more than a $500 loan at a time.
• No more than 2 outstanding loans at a time are allowed.

Rates, Fees and Other Charges in Kansas

• Lenders are prohibited to charge more than 15% of the amount advanced: A licensed lender may not charge any more than 15% of the amount they advance according to §16a-2-404.
• The annual percentage rate on any loan for $100 that is provided for 2 weeks is not permitted to go beyond 390%.

However, real APR in Kansas can reach 391% for the average $300 payday loan (According to the Center for Responsible Lending 2019).

The Maximum Term for a Payday Loan in Kansas

• A payday loan should not be given for a period of less than 7 and more than 30 days.
• Rollovers or extensions are not allowed and it is required that a borrower should make a full repayment in time.
• The grace period can be granted to borrowers according to Section 16a-2-404(9). It presupposes that a borrower should not pay any fees in case he is able to repay the loan in full by the end of the next business day after the day the loan was taken. No fees or charges can be implied in this case. If a borrower changes his mind he should notify a lender about rescinding and all the fees and charges should be returned.

Consumer Information

Attention
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.

• Only one NSF fee is allowed per loan.
• Any criminal actions against default payments are prohibited.

More information about payday loans in Kansas can be found on the official website of the Office of the State Bank Commissioner.

Regulator: Complaints & Information

Kansas Office of the State Bank Commissioner

Address: 700 SW Jackson St #300, Topeka, KS 66603
Phone: 785-296-2266
Url: https://www.osbckansas.org/
File a Complaint: https://www.osbckansas.org/consumers/complaints.html

Submit a Complaint to the CFPB

Number of Kansas Consumers Complaints by Topics

According to CFPB Consumer Complaint Database

• Fraud and threat ( 84 )
• Not exiting debt ( 47 )
• Charges from account ( 35 )
• Credit rating ( 22 )
• Lender is not available ( 21 )
• Loan to return ( 12 )
• Not requested loan ( 11 )
• Loan not received ( 4 )

The Quantity of Top Kansas Stores by Cities

Statistics

Market Shares of Companies in Kansas (by Loan Value in 2020 year)

• Advance America – $68.2 mill
• LendNation (Quik Cash) – $37.4 mill
• CE Cash Express – $33.5 mill
• Check into Cash – $28.9 mill
• Check ‘n Go – $23.7 mill
• Other companies – $47.5 mill

The History of Payday Loans in Kansas

• 1991– The first time when Kansas Legislature paid attention to the issue of payday loans and sensed the need for their regulations. At that time check cashing for a fee had prevailed in Kansas. It also appeared that the practice itself violated the Uniform Consumer Credit Code (UCCC) as lenders advanced cash in return for the post-dated checks and collected high-interest charges for it (600% – 1,600%). Thus, SB 363 was introduced. It aimed to address the issue of excessive interest rates, however, it never made it to out of the Senate.
• 1992 – Review of the SB 363. HB 2749 was also reviewed, however, to no avail again.
• 1993 – Finally, HB 2197 was passed by both the House and Senate. It enacted new consumer protections on payday loans, set limits to loan amount, loan terms and finance charges. As a matter of fact, Kansas was among the first states that enacted payday loan regulations.
• 2004 – New limitations were introduced into the payday lending regulations by the Kansas Legislature: a 7-day minimum term, 3 outstanding loans at a time (during 30 days). Also, the bill requested that all payday lenders in Kansas must keep records of all payday loan transactions.
• 2006 -b The Military Lending Act effectively capped payday loans offered to the military at 36% APR. This federal law has no exceptions, thus, no lender in Kansas is now allowed to offer loans to the military in excess of 36% APR. Specific Kansas payday loan regulations with regard to the military can be found in §16a-2-405.
• June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (expected in November 2020).
• 2019 – Currently, Kansas lawmakers are considering introducing a bill that would limit the maximum APR to 36%. The proposal is still being discussed by the legislature.
• 2021 – The bill HB 2189 is under review. HB 2189 replaces the consept “payday loan” to “small loan”, that can not be more than $2,500 with a min term 3 months and a max term 25 months; caps an anual rate at 36% for loans under $860 and 21% over $860.

[Updated As of August 2021]