Kentucky Payday Advance Laws
In times of extreme financial need, some individuals turn to payday loan lenders to borrow the funds needed to cover necessary expenses without incurring late payments or overdraft fees. Unfortunately, once an individual gets into the payday loan cycle, getting out may prove difficult due to high interest rates and short repayment terms. Many states, including Kentucky, have tightened payday loan standards to protect consumers.
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Amount and Number of Loans
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In 2009, Kentucky governor Steve Beshear signed into law new regulations regarding the payday loan industry. Included in these regulations were laws concerning the dollar amount of payday loans residents may take out and the number of loans they can have at one time. As of the signing, Kentucky residents could borrow a total of only $500 at a time, and have loans from only two payday lending institutions. To enforce these laws, the governor ordered the creation of a statewide database to track borrowers and the due dates and amounts of their payday loans. The state activated the database in early 2010.
New Lenders
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The 2009 law, which went into effect in 2010, prohibited new payday loan operations in the state of Kentucky for ten years. Thus, the state will not see any additional payday lending institutions before 2020.
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Internet Lending
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Internet lenders often assume they are exempt from state regulations, but according to the Kentucky Department of Financial Institutions, online payday lenders operating solely through the Internet are not licensed to lend to Kentucky residents. A resident borrowing from such an Internet lender is only required to repay the initial amount of the loan. Borrowers who repay the initial amount, but continue to renew their loans each payday, can revoke permission to withdraw funds from their bank accounts and provide the lender with a copy of the legislation (see references) documenting that such Internet practices are illegal.
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References
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