Illinois imposes 36% rate cap on certain loans | Weiner Brodsky Kider PC
Illinois recently enacted the Predatory Lending Prevention Act and its Department of Financial and Professional Regulation recently published a list of frequently asked questions (FAQs) regarding the law. The law entered into force on March 23, 2021.
The law imposes a rate cap of 36% on eligible loans taken out as of March 23, 2021. The law defines loans as being money or a credit given to a consumer in exchange for the consumer’s agreement on a loan. certain set of conditions, including, but not limited to all finance charges, interest or other conditions. Loans include closed and open credit, retail installment contracts, and retail motor vehicle installment contracts. The law does not apply to commercial loans.
The law also changes the reporting requirements for title-backed loans. Under the amendment, every title secured loan issued under the Illinois Consumer Installment Loans Act (CILA) must be reported to the state’s database, Veritec. The amendment requires the communication of certain information and compliance with the rules of the Ministry. Prior to the amendment, CILA did not require reporting of loans secured by securities with an annual percentage rate less than 36 percent. Illinois has suspended surveillance or enforcement action to report violations until further notice as it works to enact rules that meet these new reporting requirements.
While the law has not changed the reporting requirements for payday loans made under the Illinois Payday Loan Reform Act, the law does away with installment payday loans.
Banks, savings banks, savings and credit associations, credit unions and insurance companies which are organized, licensed or have a certificate of authority to conduct business in under the laws of any state or the United States.