093_HB2543eng HB2543 Engrossed LRB093 03657 LRD 03686 b 1 AN ACT in relation to installment loans. 2 Be it enacted by the People of the State of Illinois, 3 represented in the General Assembly: 4 Section 5. The Consumer Installment Loan Act is amended 5 by changing Sections 15 and 17 as follows: 6 (205 ILCS 670/15) (from Ch. 17, par. 5415) 7 Sec. 15. Charges permitted. 8 (a) Every licensee may lend a principal amount not 9 exceeding $40,000$25,000and may charge, contract for and 10 receive thereon interest at the rate agreed upon by the 11 licensee and the borrower, subject to the provisions of this 12 Act. 13 (b) For purpose of this Section, the following terms 14 shall have the meanings ascribed herein. 15 "Applicable interest" for a precomputed loan contract 16 means the amount of interest attributable to each monthly 17 installment period. It is computed as if each installment 18 period were one month and any interest charged for extending 19 the first installment period beyond one month is ignored. 20 The applicable interest for any monthly installment period is 21 that portion of the precomputed interest that bears the same 22 ratio to the total precomputed interest as the balances 23 scheduled to be outstanding during that month bear to the sum 24 of all scheduled monthly outstanding balances in the original 25 contract. 26 "Interest-bearing loan" means a loan in which the debt is 27 expressed as a principal amount plus interest charged on 28 actual unpaid principal balances for the time actually 29 outstanding. 30 "Precomputed loan" means a loan in which the debt is 31 expressed as the sum of the original principal amount plus HB2543 Engrossed -2- LRB093 03657 LRD 03686 b 1 interest computed actuarially in advance, assuming all 2 payments will be made when scheduled. 3 (c) Loans may be interest-bearing or precomputed. 4 (d) To compute time for either interest-bearing or 5 precomputed loans for the calculation of interest and other 6 purposes, a month shall be a calendar month and a day shall 7 be considered 1/30th of a month when calculation is made for 8 a fraction of a month. A month shall be 1/12th of a year. A 9 calendar month is that period from a given date in one month 10 to the same numbered date in the following month, and if 11 there is no same numbered date, to the last day of the 12 following month. When a period of time includes a month and 13 a fraction of a month, the fraction of the month is 14 considered to follow the whole month. In the alternative, 15 for interest-bearing loans, the licensee may charge interest 16 at the rate of 1/365th of the agreed annual rate for each day 17 actually elapsed. 18 (e) With respect to interest-bearing loans: 19 (1) Interest shall be computed on unpaid principal 20 balances outstanding from time to time, for the time 21 outstanding, until fully paid. Each payment shall be 22 applied first to the accumulated interest and the 23 remainder of the payment applied to the unpaid principal 24 balance; provided however, that if the amount of the 25 payment is insufficient to pay the accumulated interest, 26 the unpaid interest continues to accumulate to be paid 27 from the proceeds of subsequent payments and is not added 28 to the principal balance. 29 (2) Interest shall not be payable in advance or 30 compounded. However, if part or all of the consideration 31 for a new loan contract is the unpaid principal balance 32 of a prior loan, then the principal amount payable under 33 the new loan contract may include any unpaid interest 34 which has accrued. The unpaid principal balance of a HB2543 Engrossed -3- LRB093 03657 LRD 03686 b 1 precomputed loan is the balance due after refund or 2 credit of unearned interest as provided in paragraph (f), 3 clause (3). The resulting loan contract shall be deemed 4 a new and separate loan transaction for all purposes. 5 (3) Loans may be payable as agreed between the 6 parties, including payment at irregular times or in 7 unequal amounts and rates that may vary with an index 8 that is independently verifiable and beyond the control 9 of the licensee. 10 (4) The lender or creditor may, if the contract 11 provides, collect a delinquency or collection charge on 12 each installment in default for a period of not less than 13 10 days in an amount not exceeding 5% of the installment 14 on installments in excess of $200, or $10 on installments 15 of $200 or less, but only one delinquency and collection 16 charge may be collected on any installment regardless of 17 the period during which it remains in default. 18 (f) With respect to precomputed loans: 19 (1) Loans shall be repayable in substantially equal 20 and consecutive monthly installments of principal and 21 interest combined, except that the first installment 22 period may be longer than one month by not more than 15 23 days, and the first installment payment amount may be 24 larger than the remaining payments by the amount of 25 interest charged for the extra days; and provided further 26 that monthly installment payment dates may be omitted to 27 accommodate borrowers with seasonal income. 28 (2) Payments may be applied to the combined total 29 of principal and precomputed interest until the loan is 30 fully paid. Payments shall be applied in the order in 31 which they become due, except that any insurance proceeds 32 received as a result of any claim made on any insurance, 33 unless sufficient to prepay the contract in full, may be 34 applied to the unpaid installments of the total of HB2543 Engrossed -4- LRB093 03657 LRD 03686 b 1 payments in inverse order. 2 (3) When any loan contract is paid in full by cash, 3 renewal or refinancing, or a new loan, one month or more 4 before the final installment due date, a licensee shall 5 refund or credit the obligor with the total of the 6 applicable interest for all fully unexpired installment 7 periods, as originally scheduled or as deferred, which 8 follow the day of prepayment; provided, if the prepayment 9 occurs prior to the first installment due date, the 10 licensee may retain 1/30 of the applicable interest for a 11 first installment period of one month for each day from 12 the date of the loan to the date of prepayment, and shall 13 refund or credit the obligor with the balance of the 14 total interest contracted for. If the maturity of the 15 loan is accelerated for any reason and judgment is 16 entered, the licensee shall credit the borrower with the 17 same refund as if prepayment in full had been made on the 18 date the judgement is entered. 19 (4) The lender or creditor may, if the contract 20 provides, collect a delinquency or collection charge on 21 each installment in default for a period of not less than 22 10 days in an amount not exceeding 5% of the installment 23 on installments in excess of $200, or $10 on installments 24 of $200 or less, but only one delinquency or collection 25 charge may be collected on any installment regardless of 26 the period during which it remains in default. 27 (5) If the parties agree in writing, either in the 28 loan contract or in a subsequent agreement, to a 29 deferment of wholly unpaid installments, a licensee may 30 grant a deferment and may collect a deferment charge as 31 provided in this Section. A deferment postpones the 32 scheduled due date of the earliest unpaid installment and 33 all subsequent installments as originally scheduled, or 34 as previously deferred, for a period equal to the HB2543 Engrossed -5- LRB093 03657 LRD 03686 b 1 deferment period. The deferment period is that period 2 during which no installment is scheduled to be paid by 3 reason of the deferment. The deferment charge for a one 4 month period may not exceed the applicable interest for 5 the installment period immediately following the due date 6 of the last undeferred payment. A proportionate charge 7 may be made for deferment for periods of more or less 8 than one month. A deferment charge is earned pro rata 9 during the deferment period and is fully earned on the 10 last day of the deferment period. Should a loan be 11 prepaid in full during a deferment period, the licensee 12 shall credit to the obligor a refund of the unearned 13 deferment charge in addition to any other refund or 14 credit made for prepayment of the loan in full. 15 (6) If two or more installments are delinquent one 16 full month or more on any due date, and if the contract 17 so provides, the licensee may reduce the unpaid balance 18 by the refund credit which would be required for 19 prepayment in full on the due date of the most recent 20 maturing installment in default. Thereafter, and in lieu 21 of any other default or deferment charges, the agreed 22 rate of interest may be charged on the unpaid balance 23 until fully paid. 24 (7) Fifteen days after the final installment as 25 originally scheduled or deferred, the licensee, for any 26 loan contract which has not previously been converted to 27 interest-bearing under paragraph (f), clause (6), may 28 compute and charge interest on any balance remaining 29 unpaid, including unpaid default or deferment charges, at 30 the agreed rate of interest until fully paid. At the 31 time of payment of said final installment, the licensee 32 shall give notice to the obligor stating any amounts 33 unpaid. 34 (Source: P.A. 90-437, eff. 1-1-98.) HB2543 Engrossed -6- LRB093 03657 LRD 03686 b 1 (205 ILCS 670/17) (from Ch. 17, par. 5423) 2 Sec. 17. Maximum term and amount. The loan contract shall 3 provide for repayment of the principal and charges within 181 4 months from the date of the loan contract or the last 5 advance, if any, required by the loan contract. No licensee 6 shall permit an obligor to owe such licensee or an affiliate 7 (including a corporation owned or managed by the licensee) or 8 agent of such licensee an aggregate principal amount of more 9 than $40,000$25,000at any time for loans transacted 10 pursuant to this Act. 11 (Source: P.A. 90-437, eff. 1-1-98.)