Printable Format16a-3-304. (UCCC) Use of multiple agreements. (1) No creditor may engage in a pattern or practice of using multiple agreements to obtain a higher finance charge than would otherwise be permitted by the provisions of K.S.A. 16a-1-101 et seq., and amendments thereto.
(2) The excess amount of finance charge in this section is an excess charge for the purposes of the provisions on rights of parties and the provisions on civil actions by the administrator.
History: L. 1973, ch. 85, § 50; L. 1977, ch. 71, § 2; L. 1999, ch. 107, § 23; L. 2005, ch. 144, § 14; L. 2024, ch. 6, § 72; January 1, 2025.
KANSAS COMMENT, 2000
Originally, the graduated rate ceiling structure of the U3C allowed a creditor to charge higher rates on smaller balances. However, given the general lifting of the U3C's rate ceilings, this concern now only applies to closed end, non-real estate secured consumer loans and payday loans. See K.S.A. 16a-2-401(2) and K.S.A. 16a-2-404. In order to achieve maximum rates on those transactions, a creditor might arbitrarily divide a transaction into two or more agreements so that the amount financed under each is within the range on which the highest rate can be charged. By doing so, the creditor violates this section and subsection (2) makes the excess amount of finance charge provided for an excess charge for purposes of the provisions on remedies by consumers and the administrator. For example, a licensed lender violates this section by manipulating the transaction by directing a consumer seeking a $1,200 loan to sign one note for $600 and the consumer's spouse to sign another note for $600 in order to charge the highest rate permitted by K.S.A. 16a-2-401(2). On the other hand, the lender would not violate this section if one spouse borrowed $600 at one time and the other spouse on a voluntary separate loan application borrowed $600 at some other time.
Law Review and Bar Journal References:
"Interest Rates in Kansas: The Decline and Fall of Ezekiel," Barkley Clark, 49 J.B.A.K. 81, 95 (1980).