- posted: Mar. 20, 2018
- Hemmer DeFrank Wessels PLLC
- Business Law
- interest rates, Ketnucky lending practices, loan providers
Banks and other loan providers in Kentucky must follow strict state laws regarding the interest rates they may charge. What follows is a brief summary of interest rate laws in the state.
Legal maximum rates and judgment rates
In Kentucky, the maximum legal interest rate is 8 percent, unless the parties agree otherwise. Even in those exceptions, parties may not agree to a rate that is more than 4 percent over the discount rate of the Federal Reserve Bank or 19 percent (whichever is lower) for principal amounts of $15,000 or less.
The standard interest rate for court judgments is 6 percent, but if the obligation arose from a contract that specified a different rate, then that contract rate still applies, no matter if it’s higher or lower than 6 percent.
Home loans
Kentucky law has a variety of stipulations aimed at preventing predatory lending practices. For example, residential mortgages between $15,000 and $200,000, with closing costs of either $3,000 or 6 percent of the total loan, have special rules associated with them. Lenders may not charge prepayment penalties for these loans unless the borrower receives a written offer without a prepayment penalty. Then, if that offer gets rejected, the penalty cannot be more than three percent for the first year, two percent for the second year, one percent for the third year or any amount after three years.
Lenders can charge fees to change or renew a high-cost home loan or defer payments unless the fees are less than half the fees to refinance or the borrower is in default and the modifications are in the borrower’s best interest.
About Finney Law Firm, LLC
Founded in 2014, FLF has grown to 15 attorneys located in offices in Eastgate and downtown Cincinnati with five major practice areas: Corporate Law, Real Estate Law, Employment Law, Commercial Litigation and Public Interest and Constitutional Litigation. FLF has the unique claim to three 9-0 victories at the United States Supreme Court for its public interest practice along with breakthrough class action work.
FLF also has an affiliated title insurance company, Ivy Pointe Title, LLC, that closes and insures nearly a thousand commercial and residential real estate transactions annually.
For more information about Finney Law Firm, visit finneylawfirm.com.
Media Contact: Mickey McClanahan; mickey@finneylawfirm.isoc.net; 513.797.2850.