16a-2-201.   Finance charge for closed end consumercredit sales.(1) This section applies only to a closed endconsumer credit sale.

      (2)   A seller may charge a finance charge at any rate agreed to bythe parties, subject, however, to the limitations on prepaid finance chargesset forth in subsection (3).

      (3)   A seller may charge a prepaid finance charge:

      (a)   For a consumer credit sale secured by a security interest in amanufactured home as defined by 42 U.S.C. 5402(6), in an amount not to exceed5% of the amount financed for the sole purpose of reducing the interest rate ofthe consumer credit sale; or

      (b)   for any other consumer credit sale, an amount not to exceed the lesser of2% of the amount financed or $100.

      (c)   A prepaid finance charge permitted under this subsection is in additionto finance charges permitted under subsection (2). A prepaid finance chargepermitted under this subsection is fully earned when paid and is nonrefundable,unless the parties agree otherwise in writing.

      (4)   If the sale is precomputed:

      (a)   The finance charge may be calculated on the assumption that all scheduledpayments will be made when due, and the fact that payments are made eitherbefore or after the due date does not affect the amount of finance charge whichthe creditor may charge or receive; and

      (b)   the effect of prepayment is governed by subsection (5).

      (5)   Rebate upon prepayment:

      (a)   Except as provided for in this section, upon prepayment in full of aprecomputed consumer credit transaction, the creditor shall rebate to theconsumer an amount not less than the amount of rebate provided in subsection(b), paragraph (1), or redetermine the earned finance charge as provided insubsection (b), paragraph (2), and rebate any other unearned charges includingcharges for insurance. The rebate for charges for insurance shall be as prescribed by statute, rulesand regulations and administrative interpretations by the administrator.If the rebate otherwise required is less than $1, norebate need be made.

      (b)   The amount of rebate and redetermined earned finance charge shall be asfollows:

      (1)   The amount of rebate shall be determined by applying, according to theactuarial method, the rate of finance charge which was required to be disclosedin the transaction:

      (i)   Where no deferral charges have been made in a transaction, to the unpaidbalances for the actual time remaining as originally scheduled for the periodfollowing prepayment; and

      (ii)   where deferral charges have been made in a transaction, to the unpaidbalances for the actual time remaining as extended by deferral for the periodfollowing prepayment.

      The time remaining for the period following prepayment shall be either thefull days following prepayment; or both the full days, counting the date ofprepayment, between the prepayment date and the end of the computational periodin which the prepayment occurs, and the full computational periods followingthe date of prepayment to the scheduled due date of the final installment ofthe transaction.

      (2)   The redetermined earned finance charge shall be determined by applying,according to the actuarial method, the rate of finance charge which wasrequired to be disclosed in the transaction to the actual unpaid balances ofthe amount financed for the actual time the unpaid balances were outstanding asof the date of prepayment. Any delinquency or deferral charges collectedbefore the date of prepayment do not become a part of the total finance chargefor purposes of rebating unearned charges.

      (c)   Upon prepayment, but not otherwise, of a consumer credit transactionwhether or not precomputed, other than a consumer lease, a consumer rentalpurchase agreement, or a transaction pursuant to open end credit:

      (1)   If the prepayment is in full, the creditor may collect or retain aminimum charge not exceeding $5 in a transaction which had an amountfinanced of $75 or less, or not exceeding $7.50 andin a transaction which had an amount financed of more than$75, if the finance charge earned at the time of prepayment isless than the minimum allowed pursuant to this subsection.

      (2)   If the prepayment is in part, the creditor may not collect or retain aminimum finance charge.

      (d)   For the purposes of this section, the following defined terms apply:

      (1)   "Computational period" means the interval between scheduled due dates ofinstallments under the transaction if the intervals are substantially equal or,if the intervals are not substantially equal, one month if the smallestinterval between the scheduled due dates of installments under the transactionis one month or more, and otherwise one week.

      (2)   The "interval" between specified dates means the interval between themincluding one or the other but not both of them. If the interval between thedate of the transaction and the due date of the first scheduled installmentdoes not exceed one month by more than fifteen days when the computationalperiod is one month, or eleven days when the computational period is one week,the interval may be considered by the creditor as one computational period.

      (e)   This section does not preclude the collection or retention by thecreditor of delinquency charges.

      (f)   If the maturity is accelerated by any reason and judgment is obtained,the consumer is entitled to the same rebate as if payment had been made on thedate maturity is accelerated.

      (g)   Upon prepayment in full of a precomputed consumer credit transaction bythe proceeds of consumer credit insurance, the consumer or the consumer'sestate isentitled to the same rebate as though the consumer had prepaid the agreement onthe date the proceeds of the insurance are paid to the creditor, but no laterthan ten business days after satisfactory proof of loss is furnished to thecreditor.

      (6)   This section does not apply to a sale of an interest in land.Subsection (11) of K.S.A. 16a-2-401, and amendments thereto, governs thelimitations on finance charges for a contract for deed to real estate where theparties agree in writing to make the transaction subject to the uniformconsumer credit code.

      History:   L. 1973, ch. 85, § 16;L. 1980, ch. 77, § 1; L. 1981,ch. 94, § 1; L. 1982, ch. 93, § 1; L. 1983, ch. 79, § 1;L. 1985, ch. 82, § 1;L. 1988, ch. 85, § 3; L. 1988, ch. 86, § 1; L. 1988, ch. 87,§ 1;L. 1993, ch. 200, § 6;L. 1995, ch. 54, § 1;L. 1997, ch. 90, § 1;L. 1998, ch. 107, § 1;L. 1999, ch. 107, § 10;L. 2000, ch. 28, § 1; July 1.