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190.110 Finance charges -- Rates -- Computations.
(1)
(2)
(3)
(4)
(5)
The finance charge allowed by this subsection may be precomputed by using
an add-on method. If the finance charge in a retail installment sale is
precomputed it shall not exceed the following rates:
Class 1.
Any new or used motor vehicle designated by the manufacturer
by a year model not earlier than the year in which the sale is made -eleven dollars ($11) per one hundred dollars ($100) of principal balance,
as determined pursuant to KRS 190.100(2), per year of the contract.
Class 2.
Any new motor vehicle not in class 1 and any used motor
vehicle designated by the manufacturer by a year model of one (1) or two
(2) years prior to the year in which the sale is made -- thirteen dollars
($13) per one hundred dollars ($100) of principal balance, as determined
pursuant to KRS 190.100(2), per year of the contract.
Class 3.
All other motor vehicles not in class 1 or 2 -- fifteen dollars ($15)
per one hundred dollars ($100) of principal balance, as determined
pursuant to KRS 190.100(2), per year of the contract.
If the finance charge applicable to a retail installment sale is precomputed and
the retail installment contract provides for successive monthly payments,
substantially equal in amount, the maximum finance charge computed
pursuant to subsection (1) of this section for a partial year occurring at the
beginning of a contract with a term of less than one (1) year or at the end of a
contract with a remaining term greater than a year shall be prorated at the
annual maximum amount of finance charge computed under subsection (1) of
this section, based on the number of months in the partial year.
If the finance charge applicable to a retail installment sale is precomputed and
the retail installment contract provides for unequal or irregular installment
payments, the maximum finance rate of the finance charge shall be at the
effective rate provided in subsection (1) of this section, having due regard for
the schedule of payment.
Alternatively, the seller may, at his option, compute the finance charge in a
retail installment sale on a simple interest basis, taking into account the actual
number of days between payments under the contract using a fixed or variable
rate not to exceed the effective rate of finance charge permitted under
subsection (1) of this section.
For the purposes of subsections (3) and (4) of this section, the effective rate of
the finance charge permitted by subsection (1) of this section shall be the rate
computed in accordance with the actuarial method or the United States Rule
method for a retail installment contract that provides for:
(a) The total finance charge permitted under subsections (1) and (2) of this
section;
(b) Successive monthly payments substantially equal in amount; and
(c) The purchase of a vehicle of the same vehicle class over the same term
as the unequal or irregular installment payment contract subject to
subsection (3) of this section or the simple interest basis contract subject
to subsection (4) of this section. In computing the effective rate, the seller
may make any assumptions and use any method that the Truth in
Lending Act and the regulations promulgated thereunder would permit in
computing the annual percentage rate.
Effective:July 12, 2012
History: Amended 2012 Ky. Acts ch. 96, sec. 3, effective July 12, 2012. -Amended 1984 Ky. Acts ch. 391, sec. 3, effective July 13, 1984. -- Amended
1980 Ky. Acts ch. 321, sec. 2, effective July 15, 1980. -- Created 1956 Ky. Acts
ch. 105, sec. 3, effective July 1, 1956.
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