Bill Text: IL SB1758 | 2019-2020 | 101st General Assembly | Engrossed

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Amends the Consumer Installment Loan Act and the Payday Loan Reform Act. Provides that "substantially equal installment" includes a last regularly scheduled payment that is no more than 5% as large as the previous scheduled payment according to a disclosed payment schedule agreed to by the parties. Effective immediately.

Spectrum: Partisan Bill (Democrat 4-0)

Status: (Passed) 2019-08-23 - Public Act . . . . . . . . . 101-0563 [SB1758 Detail]

Download: Illinois-2019-SB1758-Engrossed.html

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AN ACT concerning regulation.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Consumer Installment Loan Act is amended by
changing Section 15 as follows:
(205 ILCS 670/15) (from Ch. 17, par. 5415)
Sec. 15. Charges permitted.
(a) Every licensee may lend a principal amount not
exceeding $40,000 and, except as to small consumer loans as
defined in this Section, may charge, contract for and receive
thereon interest at an annual percentage rate of no more than
36%, subject to the provisions of this Act; provided, however,
that the limitation on the annual percentage rate contained in
this subsection (a) does not apply to title-secured loans,
which are loans upon which interest is charged at an annual
percentage rate exceeding 36%, in which, at commencement, an
obligor provides to the licensee, as security for the loan,
physical possession of the obligor's title to a motor vehicle,
and upon which a licensee may charge, contract for, and receive
thereon interest at the rate agreed upon by the licensee and
borrower. For purposes of this Section, the annual percentage
rate shall be calculated in accordance with the federal Truth
in Lending Act.

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(b) For purpose of this Section, the following terms shall
have the meanings ascribed herein.
"Applicable interest" for a precomputed loan contract
means the amount of interest attributable to each monthly
installment period. It is computed as if each installment
period were one month and any interest charged for extending
the first installment period beyond one month is ignored. The
applicable interest for any monthly installment period is, for
loans other than small consumer loans as defined in this
Section, that portion of the precomputed interest that bears
the same ratio to the total precomputed interest as the
balances scheduled to be outstanding during that month bear to
the sum of all scheduled monthly outstanding balances in the
original contract. With respect to a small consumer loan, the
applicable interest for any installment period is that portion
of the precomputed monthly installment account handling charge
attributable to the installment period calculated based on a
method at least as favorable to the consumer as the actuarial
method, as defined by the federal Truth in Lending Act.
"Interest-bearing loan" means a loan in which the debt is
expressed as a principal amount plus interest charged on actual
unpaid principal balances for the time actually outstanding.
"Precomputed loan" means a loan in which the debt is
expressed as the sum of the original principal amount plus
interest computed actuarially in advance, assuming all
payments will be made when scheduled.

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"Small consumer loan" means a loan upon which interest is
charged at an annual percentage rate exceeding 36% and with an
amount financed of $4,000 or less. "Small consumer loan" does
not include a title-secured loan as defined by subsection (a)
of this Section or a payday loan as defined by the Payday Loan
Reform Act.
"Substantially equal installment" includes a last
regularly scheduled payment that may be less than, but not more
than 5% larger than, the previous scheduled payment according
to a disclosed payment schedule agreed to by the parties.
(c) Loans may be interest-bearing or precomputed.
(d) To compute time for either interest-bearing or
precomputed loans for the calculation of interest and other
purposes, a month shall be a calendar month and a day shall be
considered 1/30th of a month when calculation is made for a
fraction of a month. A month shall be 1/12th of a year. A
calendar month is that period from a given date in one month to
the same numbered date in the following month, and if there is
no same numbered date, to the last day of the following month.
When a period of time includes a month and a fraction of a
month, the fraction of the month is considered to follow the
whole month. In the alternative, for interest-bearing loans,
the licensee may charge interest at the rate of 1/365th of the
agreed annual rate for each day actually elapsed.
(d-5) No licensee or other person may condition an
extension of credit to a consumer on the consumer's repayment

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by preauthorized electronic fund transfers. Payment options,
including, but not limited to, electronic fund transfers and
Automatic Clearing House (ACH) transactions may be offered to
consumers as a choice and method of payment chosen by the
consumer.
(e) With respect to interest-bearing loans:
(1) Interest shall be computed on unpaid principal
balances outstanding from time to time, for the time
outstanding, until fully paid. Each payment shall be
applied first to the accumulated interest and the remainder
of the payment applied to the unpaid principal balance;
provided however, that if the amount of the payment is
insufficient to pay the accumulated interest, the unpaid
interest continues to accumulate to be paid from the
proceeds of subsequent payments and is not added to the
principal balance.
(2) Interest shall not be payable in advance or
compounded. However, if part or all of the consideration
for a new loan contract is the unpaid principal balance of
a prior loan, then the principal amount payable under the
new loan contract may include any unpaid interest which has
accrued. The unpaid principal balance of a precomputed loan
is the balance due after refund or credit of unearned
interest as provided in paragraph (f), clause (3). The
resulting loan contract shall be deemed a new and separate
loan transaction for all purposes.

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(3) Loans must be fully amortizing and be repayable in
substantially equal and consecutive weekly, biweekly,
semimonthly, or monthly installments. Notwithstanding this
requirement, rates may vary according to an index that is
independently verifiable and beyond the control of the
licensee.
(4) The lender or creditor may, if the contract
provides, collect a delinquency or collection charge on
each installment in default for a period of not less than
10 days in an amount not exceeding 5% of the installment on
installments in excess of $200, or $10 on installments of
$200 or less, but only one delinquency and collection
charge may be collected on any installment regardless of
the period during which it remains in default.
(f) With respect to precomputed loans:
(1) Loans shall be repayable in substantially equal and
consecutive weekly, biweekly, semimonthly, or monthly
installments of principal and interest combined, except
that the first installment period may be longer than one
month by not more than 15 days, and the first installment
payment amount may be larger than the remaining payments by
the amount of interest charged for the extra days; and
provided further that monthly installment payment dates
may be omitted to accommodate borrowers with seasonal
income.
(2) Payments may be applied to the combined total of

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principal and precomputed interest until the loan is fully
paid. Payments shall be applied in the order in which they
become due, except that any insurance proceeds received as
a result of any claim made on any insurance, unless
sufficient to prepay the contract in full, may be applied
to the unpaid installments of the total of payments in
inverse order.
(3) When any loan contract is paid in full by cash,
renewal or refinancing, or a new loan, one month or more
before the final installment due date, a licensee shall
refund or credit the obligor with the total of the
applicable interest for all fully unexpired installment
periods, as originally scheduled or as deferred, which
follow the day of prepayment; provided, if the prepayment
occurs prior to the first installment due date, the
licensee may retain 1/30 of the applicable interest for a
first installment period of one month for each day from the
date of the loan to the date of prepayment, and shall
refund or credit the obligor with the balance of the total
interest contracted for. If the maturity of the loan is
accelerated for any reason and judgment is entered, the
licensee shall credit the borrower with the same refund as
if prepayment in full had been made on the date the
judgement is entered.
(4) The lender or creditor may, if the contract
provides, collect a delinquency or collection charge on

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each installment in default for a period of not less than
10 days in an amount not exceeding 5% of the installment on
installments in excess of $200, or $10 on installments of
$200 or less, but only one delinquency or collection charge
may be collected on any installment regardless of the
period during which it remains in default.
(5) If the parties agree in writing, either in the loan
contract or in a subsequent agreement, to a deferment of
wholly unpaid installments, a licensee may grant a
deferment and may collect a deferment charge as provided in
this Section. A deferment postpones the scheduled due date
of the earliest unpaid installment and all subsequent
installments as originally scheduled, or as previously
deferred, for a period equal to the deferment period. The
deferment period is that period during which no installment
is scheduled to be paid by reason of the deferment. The
deferment charge for a one month period may not exceed the
applicable interest for the installment period immediately
following the due date of the last undeferred payment. A
proportionate charge may be made for deferment for periods
of more or less than one month. A deferment charge is
earned pro rata during the deferment period and is fully
earned on the last day of the deferment period. Should a
loan be prepaid in full during a deferment period, the
licensee shall credit to the obligor a refund of the
unearned deferment charge in addition to any other refund

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or credit made for prepayment of the loan in full.
(6) If two or more installments are delinquent one full
month or more on any due date, and if the contract so
provides, the licensee may reduce the unpaid balance by the
refund credit which would be required for prepayment in
full on the due date of the most recent maturing
installment in default. Thereafter, and in lieu of any
other default or deferment charges, the agreed rate of
interest or, in the case of small consumer loans, interest
at the rate of 18% per annum, may be charged on the unpaid
balance until fully paid.
(7) Fifteen days after the final installment as
originally scheduled or deferred, the licensee, for any
loan contract which has not previously been converted to
interest-bearing under paragraph (f), clause (6), may
compute and charge interest on any balance remaining
unpaid, including unpaid default or deferment charges, at
the agreed rate of interest or, in the case of small
consumer loans, interest at the rate of 18% per annum,
until fully paid. At the time of payment of said final
installment, the licensee shall give notice to the obligor
stating any amounts unpaid.
(Source: P.A. 96-936, eff. 3-21-11.)
Section 10. The Payday Loan Reform Act is amended by
changing Section 2-5 as follows:

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(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.
(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
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

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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
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

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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
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:

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(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
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

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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
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.)