SB1758 EngrossedLRB101 10278 AMC 55383 b



1 AN ACT concerning regulation.


2 Be it enacted by the People of the State of Illinois,

3represented in the General Assembly:



4 Section 5. The Consumer Installment Loan Act is amended by 
5changing Section 15 as follows:




6 (205 ILCS 670/15) (from Ch. 17, par. 5415)



7 Sec. 15. Charges permitted. 

8 (a) Every licensee may
lend a principal amount not 
9exceeding $40,000 and, except as to small consumer loans as 
10defined in this Section, may charge,
contract for
and receive 
11thereon interest at an annual percentage rate of no more than 
1236%, subject to the provisions of this Act; provided, however, 
13that the limitation on the annual percentage rate contained in 
14this subsection (a) does not apply to title-secured loans, 
15which are loans upon which interest is charged at an annual 
16percentage rate exceeding 36%, in which, at commencement, an 
17obligor provides to the licensee, as security for the loan, 
18physical possession of the obligor's title to a motor vehicle, 
19and upon which a licensee may charge, contract for, and receive 
20thereon interest at the rate agreed upon by the licensee and 
21borrower. For purposes of this Section, the annual percentage 
22rate shall be calculated in accordance with the federal Truth 
23in Lending Act.

 
 
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1 (b) For purpose of this Section, the following terms shall 
2have the
meanings ascribed herein.

3 "Applicable interest" for a precomputed loan contract 
4means the amount of
interest attributable to each monthly 
5installment period. It is computed
as if each installment 
6period were one month and any interest charged for
extending 
7the first installment period beyond one month is ignored. The

8applicable interest for any monthly installment period is, for 
9loans other than small consumer loans as defined in this 
10Section, that portion of
the precomputed interest that bears 
11the same ratio to the total precomputed
interest as the 
12balances scheduled to be outstanding during that month bear
to 
13the sum of all scheduled monthly outstanding balances in the 
14original
contract. With respect to a small consumer loan, the 
15applicable interest for any installment period is that portion 
16of the precomputed monthly installment account handling charge 
17attributable to the installment period calculated based on a 
18method at least as favorable to the consumer as the actuarial 
19method, as defined by the federal Truth in Lending Act. 

20 "Interest-bearing loan" means a loan in which the debt is

21expressed as a principal amount plus interest charged on actual 
22unpaid
principal balances for the time actually outstanding.

23 "Precomputed loan" means a loan in which the debt is 
24expressed as the sum
of the original principal amount plus 
25interest computed actuarially in
advance, assuming all 
26payments will be made when scheduled.

 
 
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1 "Small consumer loan" means a loan upon which interest is 
2charged at an annual percentage rate exceeding 36% and with an 
3amount financed of $4,000 or less. "Small consumer loan" does 
4not include a title-secured loan as defined by subsection (a) 
5of this Section or a payday loan as defined by the Payday Loan 
6Reform Act. 
7 "Substantially equal installment" includes a last 
8regularly scheduled payment that may be less than, but not more 
9than 5% larger than, the previous scheduled payment according 
10to a disclosed payment schedule agreed to by the parties. 
11 (c) Loans may be interest-bearing or precomputed.

12 (d) To compute time for either interest-bearing or 
13precomputed loans for
the calculation of interest and other 
14purposes, a month shall be a calendar
month and a day shall be 
15considered 1/30th of a month when calculation is
made for a 
16fraction of a month. A month shall be 1/12th of a year. A

17calendar month is that period from a given date in one month to 
18the same
numbered date in the following month, and if there is 
19no same numbered
date, to the last day of the following month. 
20When a period of time
includes a month and a fraction of a 
21month, the fraction of the month is
considered to follow the 
22whole month. In the alternative, for
interest-bearing loans, 
23the licensee may charge interest at the rate of
1/365th of the 
24agreed annual rate for each day actually
elapsed.

25 (d-5) No licensee or other person may condition an 
26extension of credit to a consumer on the consumer's repayment 
 
 
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1by preauthorized electronic fund transfers. Payment options, 
2including, but not limited to, electronic fund transfers and 
3Automatic Clearing House (ACH) transactions may be offered to 
4consumers as a choice and method of payment chosen by the 
5consumer. 
6 (e) With respect to interest-bearing loans:


7  (1) Interest shall be computed on unpaid principal 
8 balances outstanding
from time to time, for the time 
9 outstanding, until fully paid. Each
payment shall be 
10 applied first to the accumulated interest and the
remainder 
11 of the payment applied to the unpaid principal balance; 
12 provided
however, that if the amount of the payment is 
13 insufficient to pay the
accumulated interest, the unpaid 
14 interest continues to accumulate to be
paid from the 
15 proceeds of subsequent payments and is not added to the 
16 principal
balance.


17  (2) Interest shall not be payable in advance or 
18 compounded. However, if
part or all of the consideration 
19 for a new loan contract is the unpaid
principal balance of 
20 a prior loan, then the principal amount payable under
the 
21 new loan contract may include any unpaid interest which has 
22 accrued.
The unpaid principal balance of a precomputed loan 
23 is the balance due
after refund or credit of unearned 
24 interest as provided in paragraph (f),
clause (3). The 
25 resulting loan contract shall be deemed a new and separate

26 loan transaction for all purposes.


 
 
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1  (3) Loans must be fully amortizing and be repayable in 
2 substantially equal and consecutive weekly, biweekly, 
3 semimonthly, or monthly installments. Notwithstanding this 
4 requirement, rates may vary according to an
index that is 
5 independently verifiable and beyond the control of the 
6 licensee.


7  (4) The lender or creditor may, if the contract 
8 provides, collect a
delinquency or collection charge on 
9 each installment in default for a period of
not less than 
10 10 days in an amount not exceeding 5% of the installment on

11 installments in excess of $200, or $10 on installments of 
12 $200 or less, but
only
one delinquency and collection 
13 charge may be collected on any installment
regardless of 
14 the period during which it remains in default.

15 (f) With respect to precomputed loans:


16  (1) Loans shall be repayable in substantially equal and 
17 consecutive weekly, biweekly, semimonthly, or
monthly 
18 installments of principal and interest combined, except 
19 that the
first installment period may be longer than one 
20 month by not more than 15
days, and the first installment 
21 payment amount may be larger than the
remaining payments by 
22 the amount of interest charged for the extra days;
and 
23 provided further that monthly installment payment dates 
24 may be omitted
to accommodate borrowers with seasonal 
25 income.


26  (2) Payments may be applied to the combined total of 
 
 
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1 principal and
precomputed interest until the loan is fully 
2 paid. Payments shall be
applied in the order in which they 
3 become due, except that any insurance
proceeds received as 
4 a result of any claim made on any insurance, unless

5 sufficient to prepay the contract in full, may be applied 
6 to the unpaid
installments of the total of payments in 
7 inverse order.


8  (3) When any loan contract is paid in full by cash, 
9 renewal or
refinancing, or a new loan, one month or more 
10 before the final installment
due date, a licensee shall 
11 refund or credit the obligor with
the total of
the 
12 applicable interest for all fully unexpired installment 
13 periods, as
originally scheduled or as deferred, which 
14 follow the day of prepayment;
provided, if the prepayment 
15 occurs prior to the first installment due date,
the 
16 licensee may retain 1/30 of the applicable interest for a 
17 first
installment period of one month for each day from the 
18 date of the loan to
the date of prepayment, and shall 
19 refund or credit the obligor
with the
balance of the total 
20 interest contracted for. If the maturity of the loan
is 
21 accelerated for any reason and judgment is entered, the 
22 licensee shall
credit the borrower with the same refund as 
23 if prepayment in full had been
made on the date the 
24 judgement is entered.


25  (4) The lender or creditor may, if the contract 
26 provides, collect a
delinquency or collection charge on 
 
 
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1 each installment in default for a period of
not less than 
2 10 days in an amount not exceeding 5% of the installment on

3 installments in excess of $200, or $10 on installments of 
4 $200 or less, but
only
one delinquency or collection charge 
5 may be collected on any installment
regardless of the 
6 period during which it remains in default.


7  (5) If the parties agree in writing, either in the loan 
8 contract or in a
subsequent agreement, to a deferment of 
9 wholly unpaid installments, a
licensee may grant a 
10 deferment and may collect a deferment charge as
provided in 
11 this Section. A deferment postpones the scheduled due date 
12 of
the earliest unpaid installment and all subsequent 
13 installments as
originally scheduled, or as previously 
14 deferred, for a period equal to the
deferment period. The 
15 deferment period is that period during which no
installment 
16 is scheduled to be paid by reason of the deferment. The

17 deferment charge for a one month period may not exceed the 
18 applicable
interest for the installment period immediately 
19 following the due date of
the last undeferred payment. A 
20 proportionate charge may be made for
deferment for periods 
21 of more or less than one month. A deferment charge
is 
22 earned pro rata during the deferment period and is fully 
23 earned on the
last day of the deferment period. Should a 
24 loan be prepaid in full during
a deferment period, the 
25 licensee shall credit to the obligor a
refund of the 
26 unearned deferment charge in addition to any other refund 
 
 
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1 or
credit made for prepayment of the loan in full.


2  (6) If two or more installments are delinquent one full 
3 month or more on
any due date, and if the contract so 
4 provides, the licensee may reduce the
unpaid balance by the 
5 refund credit which would be required for prepayment
in 
6 full on the due date of the most recent maturing 
7 installment in default.
Thereafter, and in lieu of any 
8 other default or deferment charges, the
agreed rate of 
9 interest or, in the case of small consumer loans, interest 
10 at the rate of 18% per annum, may be charged on the unpaid 
11 balance until fully paid.


12  (7) Fifteen days after the final installment as 
13 originally scheduled or
deferred, the licensee, for any 
14 loan contract which has not previously been
converted to 
15 interest-bearing under paragraph (f), clause (6), may 
16 compute
and charge interest on any balance remaining 
17 unpaid, including unpaid
default or deferment charges, at 
18 the agreed rate of interest or, in the case of small 
19 consumer loans, interest at the rate of 18% per annum, 
20 until fully
paid. At the time of payment of said final 
21 installment, the licensee shall
give notice to the obligor 
22 stating any amounts unpaid.

23(Source: P.A. 96-936, eff. 3-21-11.)


24 Section 10. The Payday Loan Reform Act is amended by 
25changing Section 2-5 as follows:

 
 
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1 (815 ILCS 122/2-5)

2 Sec. 2-5. Loan terms. 
3 (a) Without affecting the right of a consumer to prepay at 
4any time without cost or penalty, no payday loan may have a 
5minimum term of less than 13 days.
6 (b) Except for an installment payday loan as defined in 
7this Section,
no payday loan may be made to a consumer if the 
8loan would result in the consumer being indebted to one or more 
9payday lenders for a period in excess of 45 consecutive days. 
10Except as provided under subsection (c) of this Section and 
11Section 2-40, if a consumer has or has had loans outstanding 
12for a period in excess of 45 consecutive days, no payday lender 
13may offer or make a loan to the consumer for at least 7 
14calendar days after the date on which the outstanding balance 
15of all payday loans made during the 45 consecutive day period 
16is paid in full. For purposes of this subsection, the term 
17"consecutive days" means a series of continuous calendar days 
18in which the consumer has an outstanding balance on one or more 
19payday loans; however, if a payday loan is made to a consumer 
20within 6 days or less after the outstanding balance of all 
21loans is paid in full, those days are counted as "consecutive 
22days" for purposes of this subsection.
23 (c) Notwithstanding anything in this Act to the contrary, a 
24payday loan
shall also include any installment loan otherwise 
25meeting the definition of
payday loan contained in Section 
 
 
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11-10, but that has a term agreed by the
parties of not less 
2than 112 days and not exceeding 180 days; hereinafter an

3"installment payday loan". The following provisions shall 
4apply:

5  (i) Any installment payday loan must be fully 
6 amortizing, with a finance
charge calculated on the 
7 principal balances scheduled to be outstanding and
be 
8 repayable in substantially equal and consecutive 
9 installments, according
to a payment schedule agreed by the 
10 parties with not less than 13 days and
not more than one 
11 month between payments; except that the first installment

12 period may be longer than the remaining installment periods 
13 by not more than
15 days, and the first installment payment 
14 may be larger than the remaining
installment payments by 
15 the amount of finance charges applicable to the
extra days. 
16 In calculating finance charges under this subsection, when 
17 the first installment period is longer than the remaining 
18 installment periods, the amount of the finance charges 
19 applicable to the extra days shall not be greater than 
20 $15.50 per $100 of the original principal balance divided 
21 by the number of days in a regularly scheduled installment 
22 period and multiplied by the number of extra days 
23 determined by subtracting the number of days in a regularly 
24 scheduled installment period from the number of days in the 
25 first installment period.
26  (ii) An installment payday loan may be refinanced by a 
 
 
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1 new installment
payday loan one time during the term of the 
2 initial loan; provided that the
total duration of 
3 indebtedness on the initial installment payday loan 
4 combined
with the total term of indebtedness of the new 
5 loan refinancing that initial
loan, shall not exceed 180 
6 days. For purposes of this Act, a refinancing
occurs when 
7 an existing installment payday loan is paid from the 
8 proceeds of
a new installment payday loan.
9  (iii) In the event an installment payday loan is paid 
10 in full prior to
the date on which the last scheduled 
11 installment payment before maturity is
due, other than 
12 through a refinancing, no licensee may offer or make a 
13 payday
loan to the consumer for at least 2 calendar days 
14 thereafter.
15  (iv) No installment payday loan may be made to a 
16 consumer if the loan would
result in the consumer being 
17 indebted to one or more payday lenders for a
period in 
18 excess of 180 consecutive days. The term "consecutive days" 
19 does not include the date on which a consumer makes the 
20 final installment payment.
21 (d) (Blank).
22 (e) No lender may make a payday loan to a consumer if the 
23total of all payday loan payments coming due within the first 
24calendar month of the loan, when combined with the payment 
25amount of all of the consumer's other outstanding payday loans 
26coming due within the same month, exceeds the lesser of:
 
 
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1  (1) $1,000; or
2  (2) in the case of one or more payday loans, 25% of the 
3 consumer's gross monthly income; or
4  (3) in the case of one or more installment payday 
5 loans, 22.5% of the consumer's gross monthly income; or
6  (4) in the case of a payday loan and an installment 
7 payday loan, 22.5% of the consumer's gross monthly income.
8 No loan shall be made to a consumer who has an outstanding 
9balance on 2 payday loans, except that, for a period of 12 
10months after March 21, 2011 (the effective date of Public Act 
1196-936), consumers with an existing CILA loan may be issued an 
12installment loan issued under this Act from the company from 
13which their CILA loan was issued.
14 (e-5) Except as provided in subsection (c)(i), no lender 
15may charge more than $15.50 per $100 loaned on any payday loan, 
16or more than $15.50 per $100 on the initial principal balance 
17and on the principal balances scheduled to be outstanding 
18during any installment period on any installment payday loan. 
19Except for installment payday loans and except as provided in 
20Section 2-25, this charge is considered fully earned as of the 
21date on which the loan is made. For purposes of determining the 
22finance charge earned on an installment payday loan, the 
23disclosed annual percentage rate shall be applied to the 
24principal balances outstanding from time to time until the loan 
25is paid in full, or until the maturity date, whichever occurs 
26first. No finance charge may be imposed after the final 
 
 
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1scheduled maturity date. 
2 When any loan contract is paid in full, the licensee shall 
3refund any unearned finance charge. The unearned finance charge 
4that is refunded shall be calculated based on a method that is 
5at least as favorable to the consumer as the actuarial method, 
6as defined by the federal Truth in Lending Act. The sum of the 
7digits or rule of 78ths method of calculating prepaid interest 
8refunds is prohibited. 
9 (f) A lender may not take or attempt to take an interest in 
10any of the consumer's personal property to secure a payday 
11loan.
12 (g) A consumer has the right to redeem a check or any other 
13item described in the definition of payday loan under Section 
141-10 issued in connection with a payday loan from the lender 
15holding the check or other item at any time before the payday 
16loan becomes payable by paying the full amount of the check or 
17other item.


18 (h) For the purpose of this Section, "substantially equal 
19installment" includes a last regularly scheduled payment that 
20may be less than, but no more than 5% larger than, the previous 
21scheduled payment according to a disclosed payment schedule 
22agreed to by the parties. 
23(Source: P.A. 100-201, eff. 8-18-17.)