Kentucky Pawn Shop Software
Built for Kentucky's Dual-Charge Structure

Kentucky's Dual-Charge Pawn Structure

Kentucky Revised Statute (KRS) 226.080 establishes a dual-charge system: pawnbrokers can charge up to 2% monthly interest on the unpaid principal balance PLUS a separate service charge up to 20% of the loan value per month (one-fifth of the loan value). This creates a total maximum monthly charge of 22% - one of the higher rates in the nation, comparable to Tennessee's 2% + 20% structure and Indiana's 3% + 20% system.

Pawnbroker Pawn Shop Software (PPSS) Kentucky Edition automatically separates interest from service charges, calculates both components based on KRS 226.080, tracks 60-day redemption periods, generates daily law enforcement reports, and maintains complete transaction registers accessible to Kentucky State Police, sheriffs, and municipal officers.

Louisville to Lexington: Kentucky's 22% Structure

Kentucky's dual-charge system creates higher effective monthly costs than many states but provides flexibility in how charges are structured:

PPSS calculates both interest and service charges automatically, tracks unpaid principal balances for interest calculation, and applies the 20% service charge to the original loan amount monthly.

Manchester to Louisville: Kentucky Pawnbrokers Trust PPSS

From Lexington to Bowling Green, Kentucky pawnbrokers choose PPSS for lifetime ownership and automatic dual-charge compliance.

How Kentucky Pawnbrokers Use PPSS

Automatic Dual-Charge Calculation

Kentucky's dual-charge system requires tracking two separate components:

1. Interest Component (2% Monthly Maximum)

• Calculated on unpaid principal balance
• Adjusts if partial payments made
• Capped at 2% per month (24% APR)

2. Service Charge (20% Monthly Maximum)

• Calculated on original loan value
• Maximum: One-fifth (1/5) of loan amount per month
• Covers: Title investigation, storage, insurance, daily reporting, other servicing costs
• Explicitly defined as NOT interest under Kentucky law

PPSS maintains separate fields for interest and service charges, automatically calculates both based on KRS 226.080 maximums, and provides receipts showing the breakdown (required under KRS 226.090).

Receipt Requirements (KRS 226.090)

Every pawnbroker must give borrowers a "plain and complete receipt" for any payment, specifying separately:

• Amount applied to principal
• Amount applied to interest

PPSS generates compliant receipts automatically, showing principal, interest, and service charge breakdowns for every payment.

Daily Law Enforcement Reporting

Kentucky pawnbrokers must maintain detailed registers and provide daily reports to law enforcement (KRS 226.040, 226.070). The service charge component explicitly includes costs for "making daily reports to local law enforcement officers."

Required Register Information:

• Date of loan or purchase
• Name and address of pledgor/seller
• Detailed property description
• Amount loaned or paid
• Time limit for redemption

Law Enforcement Access:

• Kentucky State Police
• County sheriffs and deputies
• Municipal police officers

PPSS maintains complete transaction registers accessible at any reasonable time, generates export files for electronic submission, and provides search functions for law enforcement investigations.

60-Day Redemption Period

Under KRS 226.050, pawnbrokers must:

1. Hold property for 60 days before offering for sale
2. After 60 days, send written notice of intent to sell to pledgor's last known address
3. Provide pawn ticket showing redemption terms

PPSS tracks loan dates, calculates 60-day hold periods, flags items eligible for sale, and generates notice letters with pledgor information.

Physical Possession Requirement

Kentucky law requires actual physical custody of pledged property. The 1999 Kentucky Court of Appeals ruling in Commonwealth ex rel. Chandler v. Kentucky Title Loan, Inc. established that title loans (where borrower retains vehicle) do not qualify as pawn transactions under KRS Chapter 226.

Key points:

• "Deposit of personal property" means actual physical possession
• Lien without possession is a secured loan, not a pawn
• Service charge justification includes "storing and insuring the property"
• Title loan companies cannot charge pawn rates under KRS 226.080

PPSS is designed for traditional pawn operations with physical possession of collateral. The software tracks item locations, storage areas, and condition notes for physically held property.

Kentucky Pawn Regulation Overview

Statutory Framework: KRS Chapter 226

Interest and Fees (KRS 226.080):

• Interest: Maximum 2% per month on unpaid principal
• Service Charge: Maximum 20% of loan value per month (1/5 of loan)
• Total: Up to 22% monthly (264% APR)
• Service charge covers: title investigation, storage, insurance, closing, daily reporting, other costs

Licensing (KRS 226.020, 226.030):

• City or county licenses required
• $1,000 bond to city or county
• Local approval by city legislative body or county fiscal court

Record-Keeping (KRS 226.040):

• Complete register of all loans and purchases
• Daily reporting to law enforcement
• Records accessible to KY State Police, sheriffs, municipal police

Redemption and Sale (KRS 226.050):

• 60-day holding period before sale
• Written notice to pledgor after 60 days
• Pawn ticket showing terms and redemption period

Receipt Requirements (KRS 226.090):

• Plain and complete receipt for all payments
• Must specify amount to principal and amount to interest separately

Penalties (KRS 226.990):

• $50-$500 fine for violations of KRS 226.020-226.050
• License may be forfeited
• $50-$500 fine for record-keeping violations (KRS 226.060)
• $20-$100 fine for reporting violations (KRS 226.070)

PPSS provides: Dual-charge calculation (2% interest + 20% service charge), automatic receipt generation with principal/interest breakdown, 60-day hold period tracking, daily law enforcement reporting, complete transaction registers, physical possession tracking, notice letter generation.

Pricing: PPSS Kentucky Edition