Section 110.100  Precomputed Loans

a)         A standard payment schedule is one under which a precomputed loan is repayable in substantially equal and consecutive weekly, biweekly, semimonthly, or monthly installments of principal and charges combined, and the first installment is due one weekly, biweekly, semimonthly, or monthly period from the date of the note, except as provided in subsections (b)(1), (2) and (3).

1)         The loan contract shall be drawn to reflect a standard payment schedule with payments to be made on a weekly, biweekly, semimonthly, or monthly basis, except that the first installment period may be longer than one month by not more than 15 days.

2)         If a charge is made for extra days in the first installment period it may be added to the first installment payment.  The interest for such period may be increased by ¹/₃₀ of the agreed monthly rate for each extra day.  A charge for extra days in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.

3)         If the first installment period is less than one month the loan charge shall be reduced by ¹/₃₀ of the agreed monthly rate for each day that the first installment period is less than one month, and the amount of the first installment shall be reduced by the same amount.  This adjustment in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.

b)         The obligor shall have the right to prepay a precomputed loan in full on any installment due date.  When prepayment in full occurs on a date other than a scheduled installment due date, the rebate may be computed as of the next following scheduled installment due date.

c)         When the contract is refinanced before maturity, or judgment is obtained before maturity, the same rebate is required as for prepayment in full.

d)         Any required rebate of finance charge for a precomputed loan may be calculated using the actuarial method, defined by the federal Truth in Lending Act (15 U.S.C. 1601 et seq.) and Regulation Z, Appendix J (12 CFR 226) or any other method permitted by the Act.  The required rebate is a fraction (or percentage) of the precomputed interest charge.  The fraction differs for each number of months that the contract is prepaid in full.

e)         When a precomputed interest loan contract is refinanced, accrued but uncollected interest may be included in the principal amount of the new loan contract.

f)         If two or more installments are delinquent on any installment date the contract balance may be reduced as of that date by the rebate that would be required for prepayment in full on that date.  Thereafter, the agreed contractual rate may be charged on the actual unpaid balances of the loan contract until the contract is fully paid.  Interest received shall be in lieu of the rebated charges and any delinquency or default charge that would otherwise accrue after the date of which the rebate was made.

g)         When a contract is prepaid in full, a statement or receipt shall be given to the obligor, showing the date of prepayment, the amount of the rebate, if any, and the amount paid to discharge the loan.

h)         Fifteen days after the expiration date of the loan contract, interest may be charged at the contractually agreed rate, not to exceed the rate permitted in Section 15 of the Act on any balance remaining unpaid.  At the time of final payment the licensee shall notify the obligor of the balance unpaid.

i)          Deferment for Precomputed Loans

1)         The maximum amount that may be charged for a one month's deferment is equal to the difference between the rebate that would be required for prepayment in full as of the scheduled due date of the deferred installment and the rebate that would be required for prepayment in full as of one month prior to the due date.

2)         On a precomputed loan the rebate for prepayment in full after deferment interest has been charged shall be larger than the rebate that otherwise would be required.

3)         If a rebate is required one month or more before the deferred due date of the first deferred installment, the licensee, at its option, may make a separate rebate of deferment interest for each unexpired month of the deferment period and then rebate the standard precomputed finance charge for the number of months to the original final installment date, plus one month for each month that deferment is retained.

(Source:  Amended at 47 Ill. Reg. 9271, effective June 20, 2023)