Bill Text: IL HB5341 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Payday Loan Reform Act. Provides that the finance charge for a payday loan shall not exceed an annual percentage rate of 39%.

Spectrum: Moderate Partisan Bill (Democrat 16-2)

Status: (Introduced - Dead) 2020-06-23 - Rule 19(b) / Re-referred to Rules Committee [HB5341 Detail]

Download: Illinois-2019-HB5341-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB5341 Introduced , by Rep. Mary Edly-Allen SYNOPSIS AS INTRODUCED:
815 ILCS 122/2-5
Amends the Payday Loan Reform Act. Provides that the finance charge for a payday loan shall not exceed an annual percentage rate of 39%.
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A BILL FOR
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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Payday Loan Reform Act is amended by
changing Section 2-5 as follows:
(815 ILCS 122/2-5)
Sec. 2-5. Loan terms.
(a) Without affecting the right of a consumer to prepay at
any time without cost or penalty, no payday loan may have a
minimum term of less than 13 days. Notwithstanding any other
provision of this Act, the finance charge for a payday loan,
including an installment payday loan, shall not exceed an
annual percentage rate of 39%.
(b) Except for an installment payday loan as defined in
this Section, no payday loan may be made to a consumer if the
loan would result in the consumer being indebted to one or more
payday lenders for a period in excess of 45 consecutive days.
Except as provided under subsection (c) of this Section and
Section 2-40, 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

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is paid in full. For purposes of this subsection, the term
"consecutive days" means a series of continuous calendar days
in which the consumer has an outstanding balance on one or more
payday loans; however, if a payday loan is made to a consumer
within 6 days or less after the outstanding balance of all
loans is paid in full, those days are counted as "consecutive
days" for purposes of this subsection.
(c) Notwithstanding anything in this Act to the contrary, a
payday loan shall also include any installment loan otherwise
meeting the definition of payday loan contained in Section
1-10, but that has a term agreed by the parties of not less
than 112 days and not exceeding 180 days; hereinafter an
"installment payday loan". The following provisions shall
apply:
(i) Any installment payday loan must be fully
amortizing, with a finance charge calculated on the
principal balances scheduled to be outstanding and be
repayable in substantially equal and consecutive
installments, according to a payment schedule agreed by the
parties with not less than 13 days and not more than one
month between payments; except that the first installment
period may be longer than the remaining installment periods
by not more than 15 days, and the first installment payment
may be larger than the remaining installment payments by
the amount of finance charges applicable to the extra days.
In calculating finance charges under this subsection, when

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the first installment period is longer than the remaining
installment periods, the amount of the finance charges
applicable to the extra days shall not be greater than
$15.50 per $100 of the original principal balance divided
by the number of days in a regularly scheduled installment
period and multiplied by the number of extra days
determined by subtracting the number of days in a regularly
scheduled installment period from the number of days in the
first installment period.
(ii) An installment payday loan may be refinanced by a
new installment payday loan one time during the term of the
initial loan; provided that the total duration of
indebtedness on the initial installment payday loan
combined with the total term of indebtedness of the new
loan refinancing that initial loan, shall not exceed 180
days. For purposes of this Act, a refinancing occurs when
an existing installment payday loan is paid from the
proceeds of a new installment payday loan.
(iii) In the event an installment payday loan is paid
in full prior to the date on which the last scheduled
installment payment before maturity is due, other than
through a refinancing, no licensee may offer or make a
payday loan to the consumer for at least 2 calendar days
thereafter.
(iv) No installment payday loan may be made to a
consumer if the loan would result in the consumer being

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indebted to one or more payday lenders for a period in
excess of 180 consecutive days. The term "consecutive days"
does not include the date on which a consumer makes the
final installment payment.
(d) (Blank).
(e) No lender may make a payday loan to a consumer if the
total of all payday loan payments coming due within the first
calendar month of the loan, when combined with the payment
amount of all of the consumer's other outstanding payday loans
coming due within the same month, exceeds the lesser of:
(1) $1,000; or
(2) in the case of one or more payday loans, 25% of the
consumer's gross monthly income; or
(3) in the case of one or more installment payday
loans, 22.5% of the consumer's gross monthly income; or
(4) in the case of a payday loan and an installment
payday loan, 22.5% of the consumer's gross monthly income.
No loan shall be made to a consumer who has an outstanding
balance on 2 payday loans, except that, for a period of 12
months after March 21, 2011 (the effective date of Public Act
96-936), consumers with an existing CILA loan may be issued an
installment loan issued under this Act from the company from
which their CILA loan was issued.
(e-5) Except as provided in subsection (c)(i), no lender
may charge more than $15.50 per $100 loaned on any payday loan,
or more than $15.50 per $100 on the initial principal balance

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and on the principal balances scheduled to be outstanding
during any installment period on any installment payday loan.
Except for installment payday loans and except as provided in
Section 2-25, this charge is considered fully earned as of the
date on which the loan is made. For purposes of determining the
finance charge earned on an installment payday loan, the
disclosed annual percentage rate shall be applied to the
principal balances outstanding from time to time until the loan
is paid in full, or until the maturity date, whichever occurs
first. No finance charge may be imposed after the final
scheduled maturity date.
When any loan contract is paid in full, the licensee shall
refund any unearned finance charge. The unearned finance charge
that is refunded shall be calculated based on a method that is
at least as favorable to the consumer as the actuarial method,
as defined by the federal Truth in Lending Act. The sum of the
digits or rule of 78ths method of calculating prepaid interest
refunds is prohibited.
(f) A lender may not take or attempt to take an interest in
any of the consumer's personal property to secure a payday
loan.
(g) A consumer has the right to redeem a check or any other
item described in the definition of payday loan under Section
1-10 issued in connection with a payday loan from the lender
holding the check or other item at any time before the payday
loan becomes payable by paying the full amount of the check or

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other item.
(h) For the purpose of this Section, "substantially equal
installment" includes a last regularly scheduled payment that
may be less than, but no more than 5% larger than, the previous
scheduled payment according to a disclosed payment schedule
agreed to by the parties.
(Source: P.A. 100-201, eff. 8-18-17; 101-563, eff. 8-23-19.)