Public Act 93-0264
HB2543 Enrolled LRB093 03657 LRD 03686 b
AN ACT in relation to installment loans.
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 Sections 15 and 17 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 $25,000 and may charge, contract for and
receive thereon interest at the rate agreed upon by the
licensee and the borrower, subject to the provisions of this
Act.
(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
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.
"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.
(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.
(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.
(3) Loans may be payable as agreed between the
parties, including payment at irregular times or in
unequal amounts and rates that may vary with 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 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 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
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 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 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 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. 90-437, eff. 1-1-98.)
(205 ILCS 670/17) (from Ch. 17, par. 5423)
Sec. 17. Maximum term and amount. The loan contract shall
provide for repayment of the principal and charges within 181
months from the date of the loan contract or the last
advance, if any, required by the loan contract. No licensee
shall permit an obligor to owe such licensee or an affiliate
(including a corporation owned or managed by the licensee) or
agent of such licensee an aggregate principal amount of more
than $40,000 $25,000 at any time for loans transacted
pursuant to this Act.
(Source: P.A. 90-437, eff. 1-1-98.)