Kentucky Usury Laws

Kentucky has established a tiered system when it comes to usury lending practices in that state. The general usury limit is 4% greater than the prime interest rate that is established by the Federal Reserve or 19% -- whichever figure is less. This usury rate applies to loans to individuals, to personal loans, that are under $15,000.

In addition, for personal, consumer loans that are $15,000 or more, there is no usury limitation in the Commonwealth of Kentucky. The theory behind this tiered system apparently is twofold. First, the powers that be in Commonwealth of Kentucky apparently have concluded that lenders who are providing personal loans in an amount greater than $15,000 are taking a greater risk and should be entitled to more flexibility when it comes to the amount of interest they charge for such loans. Second, there is a school of thought in Kentucky that a person who can afford to take on such a level of financing should have the financial wherewithal to pay for higher level interest rates on such loans.

Specific statutory provisions regarding usury and usurious lending practices that are prohibited in Kentucky codified at Kentucky Revised Statutes at Title 17 and Title 25. Beyond the usury provisions set forth herein and above, there are other statutory provisions that are contained in both of these statutory Titles that govern and control other types of lending practices and situations.

The usury laws that are in place and in effect in Kentucky are fairly standard to what can be found elsewhere in the United States. These Kentucky statutes specifically enumerate a maximum legal interest rate at which loans can be made. There are also other types of loan regulation on the books in Kentucky as well. For example, state charted banks, savings and loans and credit unions are subject to their own statutory schemes pertaining to interest rates that are permissible when it comes to loans made by these types of entities.

Please remember that this article is not intended to provide you with legal advice. This article has been prepared and presented to you for informational purposes. If you do have additional questions about usury laws in Kentucky or elsewhere, please contact a lawyer. Additionally, usury laws in Kentucky are subject to change. While we work to keep the information in this article accurate, current and up to date, because the laws do change, we can make no absolute guarantee pertaining to the content of this article.

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