16-205.   Interest rates or charges; contract rates continue until paymentin full; judgments; excess rates and charges void.(a) When a rate of interest or charges is specified in any contract,that rate shall continue until full payment is made, and any judgmentrendered on any such contract shall bear the same rate of interest orcharges mentioned in the contract, which rate shall be specified in thejudgment; but in no case shall such rate or charges exceed the maximum rateor amount authorized by law, and any bond, note, bill, or other contractfor the payment of money, which in effect provides that any interest orcharges or any higher rate of interest or charges shall accrue as a penaltyfor any default, shall be void as to any such provision.

      (b)   Judgments taken in accordance with the provisions of subsection (a)shall be expressed as follows:

      (1)   Judgments upon interest-bearing contracts shall provide (i) theunpaid principal balance, (ii) the date to which interest is paid, (iii)the contract rate of interest and (iv) that the unpaid principal balanceshall draw the contract rate of interest from the date to which interest ispaid until payment in full.

      (2)   Judgments upon precomputed interest-bearing contracts shall provide:(i) The unpaid principal balance shall be ascertained by deducting fromthe remaining total of payments owed on the contract that portion of theprecomputed finance charges that are unearned as of the date of accelerationof the maturity of the contract, as provided in K.S.A. 16a-2-510 for computingthe unearned portion of precomputed finance charges in the event of prepaymentin full. Any delinquency or deferral charges added to the unpaid balancesubsequent to the date of acceleration shall be first deducted from theunpaid balance prior to any such acceleration.The contract shall be accelerated as of the date provided for in theprovisionsof the contract, or if the contract does not provide for the date on whichthe contract shall be accelerated, it shall be accelerated as of the actualdate of any such acceleration; (ii) the date to which interest is paid,which date shall be the maturity date of the next installment due afterthe date of acceleration, except those contracts which are accelerated onan installment due date which shall be the date of acceleration; the dateto which interest is paid for those contracts that have matured prior tojudgment shall be calculated from maturity date of the contract; (iii)the contract rate of interest; and(iv) that the unpaid principal balance shall draw the contract rate ofinterest from the date to which interest is paid until payment in full.

      (3)   Judgments upon contracts where the finance charges are computed indollars per hundred and added on to the original balance to be financedshall provide: (i) The unpaid principal balance shall be ascertained bydeducting from the remainingtotal of payments owed on the contract that portion of the precomputed financecharges that are unearned as of the date of acceleration of the maturityof the contract as provided in K.S.A. 16a-2-510 for computing the unearnedportion of precomputed finance charges in the event of prepayment in full.Any delinquency or deferral charges added to the unpaid balance subsequentto the date of acceleration shall be first deducted from theunpaid balance prior to any such acceleration. The contract shall beacceleratedas of the date provided for in the provisions of the contract, or if thecontract does not provide for the date on which the contract shall beaccelerated,it shall be accelerated as of the actual date of any acceleration; (ii) thedate to which interest is paid, which date shall be the maturitydate of the next installment due after the date of acceleration, exceptthose contracts which are accelerated on an installment due date which shallbe the date of acceleration; the date to which interest is paid for thosecontracts that have matured prior to judgment shall be calculated from thematurity date of the contract; (iii) the contractrate of interest expressed as an annual percentage figure, which may betaken from the contract if it discloses the annual percentage rate, or itshall be ascertained in accordance with the constant ratio method which ismathematically expressed as follows:

      R = rate of charge

      m = number of payment periods in one year

      n = number of payments to discharge the debt

      c = charge in dollars

      p = principal or cash advanced

and (iv) that the unpaid principal balance shall draw thecontract rate of interest as determined herein from the date to which interestis paid untilpayment in full.

      History:   L. 1889, ch. 164, § 5; R.S. 1923, 41-105; L. 1955, ch.135, § 27; L.1974, ch. 90, § 1; L.1976, ch. 96, §1; July 1.