16a-2-103.   Computation of finance charges.(1) The provisions of this section shallapply toall consumer loans and all consumer credit sales.

      (2)   The finance charge on a consumer loan or consumer credit sale shall becomputed in accordance with the actuarial method using either the 365/365method or, if the consumer agrees in writing, the 360/360 method:

      (a)   The 365/365 method means a method of calculating the finance chargewhereby the contract rate is divided by 365 and theresulting daily rate ismultiplied by the outstanding principal amount and the actual number of days inthe computational period.

      (b)   The 360/360 method means a method of calculating the finance chargewhereby the contract rate is divided by 360 and theresulting daily rate ismultiplied by the outstanding principal amount and the number of assumed daysin the computational period. For the purposes of this subsection, a creditormay assume that a month has 30 days, regardless of the actual number of days inthe month.

      (c)   If the documentation evidencing a consumer credit contract issilent regardingwhether the 365/365 method orthe 360/360 method applies, then the 365/365 method shall apply.

      (3)   In addition to the methods listed under subsection 2, the computationof finance charges on a consumer loan secured by a first or second lien realestate mortgage may be computed using the following amortization method: Thecontract rate is divided by 360 and the resulting rate is multiplied by theoutstanding principal amount and 30 assumed days between scheduled due dates.For the purposes of this subsection, a creditor shall assume there are 30 daysin the computational period, regardless of the actual number of days betweendue dates.

      (4)   The finance charge on a consumer loan or consumercredit sale may not becomputed in accordance with the 365/360 method, whereby thecontract rate isdivided by 360 and the resulting daily rate is multiplied by the outstandingprincipal amount and the actual number of days in the computational period.

      (5)   Creditors may ignore the effect of a leap year incomputing the financecharge.

      (6) (a)   Except for any portion of a loan made pursuant to alender creditcard which does not represent a cash advance, interest or other periodicfinance charges on a consumer loan may accrue only on that portion of theprincipal which has been disbursed to or for the benefit of the consumer.

      (b)   On a consumer credit sale, interest or other periodic finance charges mayaccrue only on that portion of the principal which relates to goods, servicesor an interest in land, as the case may be, which has been shipped, delivered,furnished or otherwise made available to or for the benefit of the consumeror has been disbursed to or for the benefit of the consumer.

      (7)   Subsection (2) does not apply to a consumer credit salethe financecharge for which is computed in accordance with subsection (5) of K.S.A.16a-2-201, and amendments thereto.

      (8)   Notwithstanding any other provisions of this act, thefinance charges onconsumer loans or consumer credit sales originating prior to January 1, 1994,which computed such finance charges on a precomputed basis, shall be subject tothe conditions, limitations and restrictions contained in the uniform consumercredit code as in effect on December 31, 1993, as such code relates toprecomputed finance charges.

      (9)   This section shall be supplemental to and a part of theuniform consumercredit code.

      History:   L. 1993, ch. 200, § 1;L. 1999, ch. 107, § 9;L. 2005, ch. 144, § 8; July 1.