The label does not decide whether a transaction is a rollover
“Extension,” “renewal,” “refinance,” and “replacement loan” describe different paper arrangements. The important facts are what happens to the existing payday obligation, whether new credit documents are signed, and whether the borrower receives money beyond the amount used to retire the old balance.
A successive transaction deserves close attention when the lender requires the prior payday balance to be satisfied as part of the new deal, the new proceeds immediately pay that balance, a new finance charge appears, or the due date moves after new documents are signed. The lender’s product name does not settle those facts.
K.S.A. 16a-2-404 — Payday loans; finance charges; rights and restrictions
Distinguish the common transaction structures
| Transaction Structure | Old Obligation | New Documents | Net New Funds |
|---|---|---|---|
| Extension | The original obligation commonly remains in place while its payment date changes. | The lender may use an amendment, payment arrangement, or other revised record. | The borrower ordinarily receives no new advance solely from moving the due date. |
| Renewal | The prior obligation may be continued or replaced under revised terms; the word itself does not identify which. | A new agreement or revised loan record often appears. | Any amount delivered after satisfying the prior balance shows whether there is money beyond the old debt. |
| Refinance | A new credit obligation generally pays or substitutes for the existing obligation. | New loan documents are expected. | The new advance may exceed the payoff amount, leaving funds for the borrower. |
| Replacement loan | The old loan is paid off while another loan is presented as a separate transaction. | A separate agreement may make the transaction look distinct on paper. | Compare the disbursement with the payoff. Proceeds that immediately retire the old balance are central facts. |
| Later separate transaction | The earlier obligation has been satisfied independently before the later transaction. | The later loan has its own agreement and dates. | The borrower receives the proceeds of the later transaction rather than having them applied to an existing payday balance. |
Test the proposal against current Kansas sources
- Put the existing agreement beside the proposed agreement. Record the advance amount, finance charge, due date, payoff figure, and every new charge.
- Get the payment ledger, payoff record, and disbursement record. These show whether the old loan was paid with independent borrower funds or with proceeds from the later transaction.
- Mark the dates of both transactions and the amount actually delivered to the borrower after any payoff. A stated loan amount is different from net proceeds.
- Read the current text of K.S.A. 16a-2-404 for the applicable payday-loan rules. A covered Kansas payday cash advance is capped at $500, its finance charge is capped at 15% of the amount advanced, and its term runs from 7 to 30 days.
- For example, a $300 advance carries a maximum $45 finance charge, for $345 in repayment. The $500 cap applies to the amount advanced, not the advance plus the finance charge.
- Ask the lender to identify which document authorizes payoff of the earlier balance, where the borrower’s net proceeds are shown, and whether the lender treats the proposal as new payday credit. If the explanation and the records differ, the records matter.
K.S.A. 16a-2-404 — Payday loans; finance charges; rights and restrictions
Sources for this guide
- K.S.A. 16a-2-404 — Payday loans; finance charges; rights and restrictions — Kansas Office of Revisor of Statutes
- What are the costs and fees for a payday loan? — Consumer Financial Protection Bureau
- How do I repay a payday loan? — Consumer Financial Protection Bureau