Payday and Title Loans in

Kansas

Payday Loans in Kansas: Subprime Report

At a Glance
Kansas, USA
  • Nickname: The Sunflower State
  • Population: 2.9 million
  • Capital: Topeka
  • Website: www.kansas.gov
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About 382,712 residents of Kansas (13.6%) live below the federal poverty line (the national average is 15.5%).1 While the poverty rate remains below the national average of 15.5%, the median household income is $53,906, which is $2,610 below the national average of $56,516.2 Kansas continues to work toward an improved economy, but 4% of residents remain unemployed, which can put a damper on their ability to afford the essentials.3 And when money is a problem, residents might seek outside help through payday and title loans in Kansas—an option that should be avoided at all costs.

Kansas Median Household Income vs US Median Household Income
Kansas
US
$53,906
$56,516
Median Household Income

An Analysis of Payday Loans in Kansas

An Analysis of Payday Loans in Kansas

Kansas currently has more than two times as many payday lenders (352) as McDonald’s restaurants (147).5 In 2012, the total payday loan volume in Kansas was $436,251,200 with an average of 3,541 loans per lender—that equates to about $123,200 per store.6 Payday loans are governed in the state of Kansas per the Kansas Statutes Annotated Section 16a-2-404, which provides a list of rules and regulations lenders need to follow.7

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The History of Payday Loans in Kansas

Kansas Legislature first began its review of payday lenders in 1991. The Consumer Credit Commissioner requested the development of new legislation, citing concern that check cashing for a fee had become a prevalent practice in Kansas.8 As a result of this request, the inquiry revealed that the check cashing practices in Kansas were being conducted in violation of the Uniform Consumer Credit Code (UCCC).8

In these instances, unregulated entities were advancing money to Kansas consumers in return for the ability to hold post-dated check for a short period of time all the while collecting charges that the inquiry determined to exceeded those allowed under the UCCC.8 The Commissioner and Kansas Attorney General both agreed that this practice violated the UCCC and the Kansas Legislature needed to take action regulate payday lenders in Kansas.8

In 1991 the Kansas Legislature introduced SB 363 to address the concern about excessive interest charges and fees. The Attorney General through support behind the proposed bill.8 However, although SB 363 was recommended by committee, the bill was defeated.8

Quick Fact

The average payday loan amount is $382 with an APR of 390%. On a $300 loan, the average borrower ends up paying $1,170 in interest.9

Review of the payday loan regulations continued into 1992 in which the Senate Committee considered SB 363 and the House Committee on Commercial and Financial Institutions reviewed HB 2749.8 On final action, a member explained that passage of such legislation would burden poor consumers by raising the interest rate from 36% to 360%, and 50 members changed their votes. The legislation was killed.8

In 1993, both the House and Senate passed HB 2197. This bill enacted new consumer protections on payday loans, including limits on finance charges, limits on loan terms, and no rollover.8

Kansas was one of the first states to enact legislation on the regulation of payday loans. This payday loan statute remained unchanged for years. Despite a number of new attempts to amend the law, each revision failed until 2004.8

Kansas Payday Loan Rules and Regulations

In 2004 the Kansas Legislature passed a bill that established a seven-day minimum term for any loan and limited the number of loans a borrower takes out within a 30-day period to three.8 Payday lenders in Kansas must also keep records of all payday loan transactions. Section 16a-2-404 (four of the statute provides that a payday lending contract must be written in language of the borrower and the lender in 10-point bold typeface at the very least.8

Kansas Payday Loan Regulations
  • Maximum loan amount:$500
  • Loan Term:7-30 days
  • Rollovers Permitted:No
  • Fees and finance charges:15% of the loan amount
  • Finance charge on a 14-day $100 loan:$15
  • APR on a 14-day $100 loan:390%
  • Maximum Number of Outstanding Loans at a Time:Two – May not make more than 3 loans to a borrower within a 30-day period.10

Final Notes on Payday Loans in Kansas

The Kansas Legislature continues to fight for Kansas consumers’ best interests. And, while not all of the efforts to pass legislation have succeeded, the fight for progress continues. Kansas state law now has specific guidelines set in place for payday lenders, but additional regulation is still needed to protect consumers from the 390% APR associated with these types of loans.

Quick Fact

In some instances, the APR on payday loans in 1991 ranged from 600% to 1600%.8

An Analysis of Title Loans in Kansas

In Kansas, title loans are structured as open-ended lines of credit.11 Because Kansas does not cap interest rates for open-ended credit through qualified lenders, title lenders have shifted the the structure of their loans to fall into the line of credit structure.11

Quick Fact

Kansas title loan fees totaled $45.76 million, while payday loan fees totaled $65.4 million.12

The History of Title Loans in Kansas

Kansas joins California, Louisiana, South Carolina for states that have not explicitly authorized car title lending.12 Lenders get away with this practice by exposing a loophole that allows for triple-digit annual rates to borrowers. Car title lenders in Kansas avoid a 36% annual rate cap that applied to closed-end small loans by calling their loans “open-ended credit.”12

In 2011, the Committee on Commerce and Economic Development proposed the ultimately enacted House Bill No. 2235 regulating title loans in Kansas.14 Through this House Bill, title loans received stricter regulations, such as a limit on renewals and an interest rate cap of 36%.14 Unfortunately, title lenders in Kansas have found a way to circumvent this law and charge triple digit APRs with an open-ended credit title loans structure instead.14

Kansas Title Loans and Total Loan Volume Vs Other States

Kansas

icon-kansas

86 Kansas Title Loan Stores13
19,522 Kansas Title Loans13
$20,341,924 Total Kansas Title Loan Volume13

California

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281 California Title Loan Stores13
63,787 California Title Loans13
$66,466,054 Total California Title Loan Volume13

Louisiana

icon-louisiana

180 Louisiana Title Loan Stores13
40,860 Louisiana Title Loans13
$42,576,120 Total Louisiana Title Loan Volume13

South Carolina

icon-south-carolina

352 South Carolina Title Loan Stores13
79,904 South Carolina Title Loans13
$483,259,968 Total South Carolina Title Loan Volume13

In 2011, the Committee on Commerce and Economic Development proposed the ultimately enacted House Bill No. 2235 regulating title loans in Kansas.14 Through this House Bill, title loans received stricter regulations, such as a limit on renewals and an interest rate cap of 36%.14 Unfortunately, title lenders in Kansas have found a way to circumvent this law and charge triple digit APRs with an open-ended credit title loans structure instead.14

Kansas Title Loan Restrictions

In the state of Kansas, specific title loan restrictions are provided by the provisions of HB No. 2235. Title lenders in Kansas must abide by the following regulations (to name a few):14

• The maximum loan amount is $2,500
• A title lender may charge a maximum interest rate of 36% per annum.
• A title loan may be extended for a maximum of two additional 30-day periods by mutual consent of the title lender and borrower.
• After the maturity date and any extensions of the loan, the contract rate of interest can be no more than 3% per month of the loan proceeds.
• A borrower can prepay in full the unpaid balance of a title loan at any time without penalty.

This long list of rules and regulations for title loans in Kansas works to protect consumers from getting stuck in an endless cycle of debt. However, as mentioned above, title lenders in Kansas continue to circumvent these provisions by classifying the title loans as open-ended credit loans.14 As a result, lenders are able to charge average interest rates around 264-360% per year.14

Final Notes on Title Loans in Kansas

Title loans are designed to trap a borrower in a cycle of debt (not unlike payday loans), which is why the Kansas State Legislature has attempted placed strict guidelines for lenders through legislation. Unfortunately, though, title lenders have found a way to circumvent these laws and continue to charge triple digit interest rates. Title lenders keep finding a way around state regulations, but the Kansas State Legislature has not given up yet. Legislation continues to fight the predatory lending battle with help from consumers.

Regulating Payday and Title Lenders in Kansas

Whether you need money for an emergency, or you’re just short that month, don’t take the “easiest” option of payday or title loans in Kansas. While Legislation has put regulations into effect, lenders continue to find ways to take as much money from those who need it the most.

Lenders must follow the payday and title loan laws of Kansas. However, through loopholes, lenders continue to charge borrowers far more than Kansas Legislation has allowed through regulations. If a lender isn’t following Kansas regulations, make sure to report them. Title loans and payday loans in Kansas aren’t good options for making ends meet. But what if you’ve already fallen prey to predatory lending in Kansas? Reach out and get help.

 

How to Report a Lender in Kansas

Contact the Office of the State Bank Commissioner in Kansas by visiting http://www.osbckansas.org/ . Once you are on the website, choose the “Consumers” tab at the top of the screen. From there you will select “File a Complaint”.

Before filing a complaint, attempt to call someone with authority at the company, such as the owner, president, or consumer complaint specialist to resolve your issue. If you cannot reach a resolution, determine who regulates the entity, complete the Consumer Assistance Form and submit it with any supporting documentation.

Kansas Office of the State Bank Commissioner Information
  • Address:700 SW Jackson, Suite 300 Topeka, KS 66603
  • Phone:(785) 296-2266
  • Fax:(785) 296-6037
  • Website:http://www.osbckansas.org/

Outside Help for Payday and Title Loans in Kansas

Outside of the Office of the State Bank Commissioner, you can find help and guidance with the Kansas Catholic Conference. In 2015, the Kansas Catholic Conference began pursuing tougher laws for payday loans because the industry preys on the poor.15 Reach out to the Kansas Catholic Conference to learn more about their push for stricter regulations on payday and title loans in Kansas. With your help, the Kansas Catholic Conference might have a better chance at fighting predatory lending.

 

Consumer Protection in Kansas

The payday loan and title loan industry isn’t making it easy on lawmakers in Kansas. With every court case  and legislative proposal against predatory lending, payday and title lenders continue to fight back.

To help Kansas Legislation continue their battle against payday and title loans, and to better protect you, it is important to reach out. By understanding warning signs, Kansas regulations and where to report a lender or seek outside help, you can help set new laws and legislations in place.

This page is available as a go-to resource for title loans and payday loans in Kansas. Use this page for all the information you need, and then some.

Guides to Payday and Title Loans in Kansas Cities

You know payday and title loans in Kansas are a problem. But what about at the city level?

Check out these payday and title loan guides for the following cities in Kansas…

Kansas City
Lawrence
Olathe
Topeka
Wichita

Works Cited

1 “Kansas” Talk Poverty. Accessed March 28, 2017. https://talkpoverty.org/state-year-report/kansas-2015-report/

2 “Spouses head back to work, boost household income in Kansas” The Wichita Eagle. Accessed March 28, 2017. http://www.kansas.com/news/business/article102212552.html

3 “Kansas Economy at a Glance” Bureau of Labor Statistics. Accessed March 28, 2017. https://www.bls.gov/eag/eag.ks.htm

4 “State Debt” Ballotpedia. Accessed February 13, 2017. https://ballotpedia.org/State_debt

5 “McDonalds’ vs. Payday Lenders” California State University Northridge. Accessed February 13, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm

6 “Payday Lending Abuses and Predatory Practices” Center for Responsible Lending. Accessed March 28, 2017. http://www.responsiblelending.org/state-of-lending/reports/10-Payday-Loans.pdf

7 “2012 Statute” Kansas Legislature. Accessed March 28, 2017. http://kslegislature.org/li_2012/b2011_12/statute/016a_000_0000_chapter/016a_002_0000_article/016a_002_0404_section/016a_002_0404_k/

8 “Kansas Legislator Briefing Book 2017” Kansas Legislative Research Department. Accessed March 28, 2017. http://www.kslegresearch.org/KLRD-web/Publications/BriefingBook/2017Briefs/E-2-PaydayLoanRegulation.pdf

9 “J-2 Payday Loan Regulation” Kansas Legislative Research Department. Accessed March 28, 2017. http://www.kslegresearch.org/KLRD-web/Publications/2015Briefs/2015/J-2-PaydayLoanRegulation.pdf

10 “Payday Loan Consumer Information” CFA. Accessed February 13, 2017. http://www.paydayloaninfo.org/state-information/8

11 “Car Title Loan Law Chart” Loans.org. Accessed February 13, 2017. http://loans.org/auto/studies/car-title-state-laws

12 “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf

13 “Car-Title Lending” Center for Responsible Lending. Accessed March 28, 2017. https://www.tml.org/p/Center%20For%20Responsible%20Lending%20Car%20Title%20Loans%20Report.pdf

14 “House Bill No. 2235” Kansas Legislature. Accessed March 28, 2017. http://www.kslegislature.org/li_2012/b2011_12/measures/documents/hb2235_00_0000.pdf

15 “Kansas Catholic Conference pursuing tougher laws for payday loans” The Wichita Eagle. Accessed March 28, 2017. http://www.kansas.com/news/politics-government/article5363700.html