Illinois recently passed the Predatory Loan Prevention Act, and its Department of Financial and Professional Regulation recently published a list of Frequently Asked Questions (FAQ) regarding the Law. The law entered into force on March 23, 2021.
The law imposes a 36 percent rate cap on eligible loans entered into on or after March 23, 2021. The law defines loans as money or credit given to a consumer in exchange for the consumer’s agreement to a certain amount. set of conditions, including, but not limited to any finance charges, interest or other conditions. Loans include closed and open credit, retail installment contracts, and retail motor vehicle installment contracts. The Act does not apply to commercial loans.
The Act also changes the reporting requirements for loans guaranteed by title. Under the amendment, every title secured loan issued under the Illinois Consumer Installment Loans Act (CILA) must be reported in the state’s database, Veritec. The amendment requires the reporting of certain information and compliance with Department rules. Prior to the amendment, CILA did not require reporting of loans guaranteed by title with an annual percentage rate less than 36%. Illinois has suspended surveillance or enforcement actions to report violations until further notice while it works to enact rules that meet these new reporting requirements.
Although the law has not changed the reporting requirements for payday loans made under the Illinois Payday Loan Reform Act, the law does remove installment payday loans.
Banks, savings banks, savings and credit associations, credit unions and insurance companies which are organized, licensed or hold a certificate of authority to make transactions are exempt from the law. business under the laws of any state or the United States.