97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012
HB5455

 

Introduced 2/15/2012, by Rep. Luis Arroyo

 

SYNOPSIS AS INTRODUCED:
 
815 ILCS 122/2-5

    Amends the Payday Loan Reform Act. Provides that a lender may not make a loan to a consumer if the total of all payday loan payments coming due within any month, rather than the first calendar month, during the term of the loan exceeds the lesser of $1,000 or specified percentages of the consumer's gross monthly income.


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A BILL FOR

 

HB5455LRB097 17997 JLS 63220 b

1    AN ACT concerning payday loans.
 
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
 
4    Section 5. The Payday Loan Reform Act is amended by
5changing Section 2-5 as follows:
 
6    (815 ILCS 122/2-5)
7    Sec. 2-5. Loan terms.
8    (a) Without affecting the right of a consumer to prepay at
9any time without cost or penalty, no payday loan may have a
10minimum term of less than 13 days.
11    (b) Except for an installment payday loan as defined in
12this Section, no payday loan may be made to a consumer if the
13loan would result in the consumer being indebted to one or more
14payday lenders for a period in excess of 45 consecutive days.
15Except as provided under subsection (c) of this Section and
16Section 2-40, if a consumer has or has had loans outstanding
17for a period in excess of 45 consecutive days, no payday lender
18may offer or make a loan to the consumer for at least 7
19calendar days after the date on which the outstanding balance
20of all payday loans made during the 45 consecutive day period
21is paid in full. For purposes of this subsection, the term
22"consecutive days" means a series of continuous calendar days
23in which the consumer has an outstanding balance on one or more

 

 

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1payday loans; however, if a payday loan is made to a consumer
2within 6 days or less after the outstanding balance of all
3loans is paid in full, those days are counted as "consecutive
4days" for purposes of this subsection.
5    (c) Notwithstanding anything in this Act to the contrary, a
6payday loan shall also include any installment loan otherwise
7meeting the definition of payday loan contained in Section
81-10, but that has a term agreed by the parties of not less
9than 112 days and not exceeding 180 days; hereinafter an
10"installment payday loan". The following provisions shall
11apply:
12        (i) Any installment payday loan must be fully
13    amortizing, with a finance charge calculated on the
14    principal balances scheduled to be outstanding and be
15    repayable in substantially equal and consecutive
16    installments, according to a payment schedule agreed by the
17    parties with not less than 13 days and not more than one
18    month between payments; except that the first installment
19    period may be longer than the remaining installment periods
20    by not more than 15 days, and the first installment payment
21    may be larger than the remaining installment payments by
22    the amount of finance charges applicable to the extra days.
23    In calculating finance charges under this subsection, when
24    the first installment period is longer than the remaining
25    installment periods, the amount of the finance charges
26    applicable to the extra days shall not be greater than

 

 

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1    $15.50 per $100 of the original principal balance divided
2    by the number of days in a regularly scheduled installment
3    period and multiplied by the number of extra days
4    determined by subtracting the number of days in a regularly
5    scheduled installment period from the number of days in the
6    first installment period.
7        (ii) An installment payday loan may be refinanced by a
8    new installment payday loan one time during the term of the
9    initial loan; provided that the total duration of
10    indebtedness on the initial installment payday loan
11    combined with the total term of indebtedness of the new
12    loan refinancing that initial loan, shall not exceed 180
13    days. For purposes of this Act, a refinancing occurs when
14    an existing installment payday loan is paid from the
15    proceeds of a new installment payday loan.
16        (iii) In the event an installment payday loan is paid
17    in full prior to the date on which the last scheduled
18    installment payment before maturity is due, other than
19    through a refinancing, no licensee may offer or make a
20    payday loan to the consumer for at least 2 calendar days
21    thereafter.
22        (iv) No installment payday loan may be made to a
23    consumer if the loan would result in the consumer being
24    indebted to one or more payday lenders for a period in
25    excess of 180 consecutive days. The term "consecutive days"
26    does not include the date on which a consumer makes the

 

 

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1    final installment payment.
2    (d) (Blank).
3    (e) No lender may make a payday loan to a consumer if the
4total of all payday loan payments coming due within any the
5first calendar month during the term of the loan, when combined
6with the payment amount of all of the consumer's other
7outstanding payday loans coming due within the same month,
8exceeds the lesser of:
9        (1) $1,000; or
10        (2) in the case of one or more payday loans, 25% of the
11    consumer's gross monthly income; or
12        (3) in the case of one or more installment payday
13    loans, 22.5% of the consumer's gross monthly income; or
14        (4) in the case of a payday loan and an installment
15    payday loan, 22.5% of the consumer's gross monthly income.
16    No loan shall be made to a consumer who has an outstanding
17balance on 2 payday loans, except that, for a period of 12
18months after the effective date of this amendatory Act of the
1996th General Assembly, consumers with an existing CILA loan may
20be issued an installment loan issued under this Act from the
21company from which their CILA loan was issued.
22    (e-5) Except as provided in subsection (c)(i), no lender
23may charge more than $15.50 per $100 loaned on any payday loan,
24or more than $15.50 per $100 on the initial principal balance
25and on the principal balances scheduled to be outstanding
26during any installment period on any installment payday loan.

 

 

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1Except for installment payday loans and except as provided in
2Section 2-25, this charge is considered fully earned as of the
3date on which the loan is made. For purposes of determining the
4finance charge earned on an installment payday loan, the
5disclosed annual percentage rate shall be applied to the
6principal balances outstanding from time to time until the loan
7is paid in full, or until the maturity date, which ever occurs
8first. No finance charge may be imposed after the final
9scheduled maturity date.
10    When any loan contract is paid in full, the licensee shall
11refund any unearned finance charge. The unearned finance charge
12that is refunded shall be calculated based on a method that is
13at least as favorable to the consumer as the actuarial method,
14as defined by the federal Truth in Lending Act. The sum of the
15digits or rule of 78ths method of calculating prepaid interest
16refunds is prohibited.
17    (f) A lender may not take or attempt to take an interest in
18any of the consumer's personal property to secure a payday
19loan.
20    (g) A consumer has the right to redeem a check or any other
21item described in the definition of payday loan under Section
221-10 issued in connection with a payday loan from the lender
23holding the check or other item at any time before the payday
24loan becomes payable by paying the full amount of the check or
25other item.
26(Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)