Legal Status: Legal
Citation:
Ill. Comp. Stat. Ann. § 122/1-1
Loan Terms:
Maximum Loan Amount: lesser of $1000 or 25% gross monthly income
Loan Term: 13-45 days
Maximum Finance Rate and Fees: $15.50 per $100
Finance Charge for 14-day $100 loan: $15.50
APR for 14-day $100 loan: 403%
Debt Limits:
Maximum Number of Outstanding Loans at One Time: Two
Rollovers Permitted: None (cannot rollover)
Cooling-off Period: 7 days after 45 consecutive loan days
Repayment Plan: Yes
Collection Limits:
Collection Fees: One $25 NSF fee (Presentment limit = 2)
Criminal Action: Prohibited
Where to Complain, Get Information:
Regulator: Illinois Division of Financial Institutions
Address: Consumer Credit Section, 320 W. Washington Springfield IL 62701
Phone: (888) 298-8089
Applicability: Any lender that offers or makes a payday loan to a consumer in Illinois and to any person or entity that seeks to evade its applicability by any device, subterfuge, or pretense whatsoever. A lender that is an agent for a bank, savings bank, savings and loan association, credit union, or insurance company for the purpose of brokering, selling, or otherwise offering payday loans made by the bank, savings bank, savings and loan association, credit union, or insurance company shall be subject to all of the provisions of this Act, except those provisions related to finance charge. Otherwise Consumer Installment Loan Act applies. 205 Ill. Comp. Stat § 670/15 (allows interest at any contract rate).
Exemptions: Retail sellers who cash checks incidental to a retail sale and who charge no more than the fees as provided by the Check Cashing Act per check for the service. Banks, savings banks, savings and loan associations, credit unions, and insurance companies organized, chartered, or holding a certificate of authority to do business under the laws of this State or any other state or under the laws of the United States.
Licensing requirements: Written application; $1,000 annual fee; $50,000 bond for each location (max: $500,000) A license shall be issued for no longer than one year, and no renewal of a license may be provided if a licensee has substantially violated this Act and has not cured the violation to the satisfaction of the Department. A licensee shall appoint, in writing, the Secretary as attorney-in-fact upon whom all lawful process against the licensee may be served with the same legal force and validity as if served on
Required disclosures: Before a payday loan is made, a lender shall deliver to the consumer a pamphlet prepared by the Secretary that: explains, in simple English and Spanish, all of the consumer’s rights and responsibilities in a payday loan transaction includes a toll-free number to the Secretary’s office to handle concerns or provide information about whether a lender is licensed, whether complaints have been filed with the Secretary, and the resolution of those complaints; and provides information regarding the availability of debt management services. Lenders shall provide consumers with a written agreement that includes the following information in English and in the language in which the loan was negotiated: the name and address of the lender making the payday loan, and the name and title of the individual employee who signs the agreement on behalf of the lender; disclosures required by the federal Truth in Lending Act; a clear description of the consumer’s payment obligations under the loan; a notice stating: “You cannot be prosecuted in criminal court to collect this loan.” This information must be conspicuously disclosed in the loan document and shall be located immediately preceding the signature of the consumer; and the following statement, in at least 14-point bold type face: “WARNING: This loan is not intended to meet long-term financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation.” The following notices in English and Spanish must be conspicuously posted by a lender in each location of a business providing payday loans: A notice that informs consumers that the lender cannot use the criminal process against a consumer to collect any payday loan; the schedule of all finance charges to be charged on loans with an example of the amounts that would be charged on a $100 loan payable in 13 days and a $400 loan payable in 30 days, giving the corresponding annual percentage rate; In one-inch bold type, a notice to the public in the lending area of each business location containing the following statement: “WARNING: This loan is not intended to meet long-term financial needs. This loan should be used only to meet short-term cash needs. The cost of your loan may be higher than loans offered by other lending institutions. This loan is regulated by the Department of Financial and Professional Regulation.” In one-inch bold type, a notice to the public in the lending area of each business location containing the following statement: “INTEREST-FREE REPAYMENT PLAN: If you still owe on one or more payday loans after 35 days, you are entitled to enter into a repayment plan. The repayment plan will give you at least 55 days to repay your loan in installments with no additional finance charges, interest, fees, or other charges of any kind.”
Loan terms: Loans cannot be less than 13 days nor more than 45 days. If a consumer has or has had loans outstanding for a period in excess of 45 consecutive days, no payday lender may offer or make a loan to the consumer for at least 7 calendar days after the date on which the outstanding balance of all payday loans made during the 45 consecutive day period is paid in full. Total principal amount of all of the consumer’s outstanding payday loans cannot exceed the lesser of $1,000 or 25% of the consumer’s gross monthly income. No payday loan may be made to a consumer who has an outstanding balance on 2 payday loans. Before entering into a loan agreement with a consumer, a lender must use a commercially reasonable method of verification to verify that the proposed loan agreement is permissible under this Act. If the consumer has or has had one or more payday loans outstanding for 35 consecutive days, any payday loan outstanding on the 35th consecutive day shall be payable under the terms of a repayment plan at the consumer’s request. The consumer has until 28 days after the default date of the loan to request a repayment plan. Within 48 hours after the request, the lender must prepare the repayment plan agreement and both parties must execute the agreement. Execution of the repayment plan agreement shall be made in the same manner in which the loan was made and shall be evidenced in writing. Once the loan becomes subject to a repayment plan, the loan shall not be construed to be in default until the default date provided under the terms of the repayment plan.
Permitted charges: No lender may charge more than $15.50 per $100 loaned on any payday loan over the term of the loan. This charge is considered fully earned as of the date on which the loan is made. If there are insufficient funds to pay a check, Automatic Clearing House debit on the day of presentment and only after the lender has incurred an expense, a lender may charge a fee not to exceed $25. Only one such fee may be collected by the lender with respect to a particular check, ACH debit, or item even if it has been deposited and returned more than once. A lender shall present the check, ACH debit for payment not more than twice. A fee charged under this subsection (a) is a lender’s exclusive charge for late payment. Insufficient fund fee.
Prohibited acts: Loan rollovers; threatening to use or using the criminal process in this or any other state to collect on the loan; using any device or agreement that would have the effect of charging or collecting more fees or charges than allowed by this Act, including, but not limited to, entering into a different type of transaction with the consumer; engaging in unfair, deceptive, or fraudulent practices in the making or collecting of a payday loan; using or attempting to use the check provided by the consumer in a payday loan as collateral for a transaction not related to a payday loan; knowingly accepting payment in whole or in part of a payday loan through the proceeds of another payday loan provided by any licensee; knowingly accepting any security for a payday loan; charging any fees or charges other than those specifically authorized by this Act; threatening to take any action against a consumer that is prohibited by this Act or making any misleading or deceptive statements regarding the payday loan or any consequences thereof; Making a misrepresentation of a material fact by an applicant for licensure in obtaining or attempting to obtain a license. Including any of the following provisions in loan documents: a confession of judgment clause; a waiver of the right to a jury trial, if applicable, in any action brought by or against a consumer, unless the waiver is included in an allowed arbitration clause; a mandatory arbitration clause that is oppressive, unfair, unconscionable, or substantially in derogation of the rights of consumers; or a provision in which the consumer agrees not to assert any claim or defense arising out of the contract. Selling any insurance of any kind whether or not sold in connection with the; collecting a delinquency or collection charge on any installment regardless of the period in which it remains in default; collecting treble damages on an amount owing from a payday loan; Refusing, or intentionally delaying or inhibiting, the consumer’s right to enter into a repayment plan pursuant to this Act; charging for, or attempting to collect, attorney’s fees, court costs, or arbitration costs incurred in connection with the collection of a payday loan; making a loan in violation of this Act; garnishing the wages or salaries of a consumer who is a member of the military; failing to suspend or defer collection activity against a consumer who is a member of the military and who has been deployed to a combat or combat-support posting; contacting the military chain of command of a consumer who is a member of the military in an effort to collect on a payday loan; advertising for loans transacted under this Act may not be false, misleading, or deceptive. Payday loan advertising, if it states a rate or amount of charge for a loan, must state the rate as an annual percentage rate. No licensee shall conduct the business of making loans under this Act within any office, suite, room, or place of business in which any other business is solicited or engaged in unless the other business is licensed by the Department or, in the opinion of the Secretary, the other business would not be contrary to the best interests of consumers and is authorized by the Secretary in writing.
Penalties: Material violations of this Act constitute a violation of the Consumer Fraud and Deceptive Business Practices Act and are unenforceable against the consumer. The Secretary may hold hearings, make findings of fact, conclusions of law, issue cease and desist orders, have the power to issue fines of up to $10,000 per violation, refer the matter to the appropriate law enforcement agency for prosecution under this Act, and suspend or revoke a license granted under this Act.
