Printable Format16a-3-308. (UCCC) Balloon payments. In a consumer credit transaction with a balloon payment, other than one pursuant to open-end credit, the consumer shall have the right to refinance the amount of that payment at the time it is due without penalty. The terms of the refinancing shall be no less favorable to the consumer than the terms of the original transaction. The provisions of this section shall not apply to the extent that the payment schedule is adjusted to the seasonal or irregular income of the consumer.
History: L. 1973, ch. 85, § 54; L. 1981, ch. 93, § 10; L. 1991, ch. 73, § 1; L. 2002, ch. 125, § 1; L. 2009, ch. 29, § 20; L. 2024, ch. 6, § 76; January 1, 2025.
KANSAS COMMENT, 2010
Balloon payments can be used to induce a buyer or borrower to enter into a burdensome contract by offering invitingly small installment payments until the end of the contract when the buyer or borrower is confronted with a balloon payment too large to pay. See also K.S.A. 16a-2-308, prohibiting balloon payments in certain small supervised loans. This section meets the threat of misuse of balloon payments by giving the consumer the right to compel refinancing of the amount of the balloon payment at the time it is due without penalty and under terms no less favorable than those of the original transaction. Under the refinancing, the size of the installment payments may not exceed the average scheduled payments (excluding the balloon payment) and the rate of finance charge may not exceed that under the original agreement. If the balloon payment was agreed to by the parties to accommodate the consumer because of his seasonal or irregular income expectations, the abuse at which this section is aimed is not present and the section does not apply.
Law Review and Bar Journal References:
Mentioned in discussion of limitation of the effect of various clauses in consumer notes, Barkley Clark, 42 J.B.A.K. 147, 199 (1973).
"Farmers and the Law: Exemptions and Exceptions," J. W. Looney, 50 J.B.A.K. 7, 16 (1981).
"2002 Legislative Wrap-Up," Paul T. Davis, 71 J.K.B.A. No. 7, 15 (2002).
Attorney General's Opinions:
Interest and charges; usury. 79-252.
Limitations on consumer's liability; balloon payments; denial of right to refinance. 82-143.