Illinois General Assembly - Full Text of HB5341
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Full Text of HB5341  101st General Assembly




State of Illinois
2019 and 2020


Introduced , by Rep. Mary Edly-Allen


815 ILCS 122/2-5

    Amends the Payday Loan Reform Act. Provides that the finance charge for a payday loan shall not exceed an annual percentage rate of 39%.

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HB5341LRB101 18979 JLS 68438 b

1    AN ACT concerning business.
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. Notwithstanding any other
11provision of this Act, the finance charge for a payday loan,
12including an installment payday loan, shall not exceed an
13annual percentage rate of 39%.
14    (b) Except for an installment payday loan as defined in
15this Section, no payday loan may be made to a consumer if the
16loan would result in the consumer being indebted to one or more
17payday lenders for a period in excess of 45 consecutive days.
18Except as provided under subsection (c) of this Section and
19Section 2-40, if a consumer has or has had loans outstanding
20for a period in excess of 45 consecutive days, no payday lender
21may offer or make a loan to the consumer for at least 7
22calendar days after the date on which the outstanding balance
23of all payday loans made during the 45 consecutive day period



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1is paid in full. For purposes of this subsection, the term
2"consecutive days" means a series of continuous calendar days
3in which the consumer has an outstanding balance on one or more
4payday loans; however, if a payday loan is made to a consumer
5within 6 days or less after the outstanding balance of all
6loans is paid in full, those days are counted as "consecutive
7days" for purposes of this subsection.
8    (c) Notwithstanding anything in this Act to the contrary, a
9payday loan shall also include any installment loan otherwise
10meeting the definition of payday loan contained in Section
111-10, but that has a term agreed by the parties of not less
12than 112 days and not exceeding 180 days; hereinafter an
13"installment payday loan". The following provisions shall
15        (i) Any installment payday loan must be fully
16    amortizing, with a finance charge calculated on the
17    principal balances scheduled to be outstanding and be
18    repayable in substantially equal and consecutive
19    installments, according to a payment schedule agreed by the
20    parties with not less than 13 days and not more than one
21    month between payments; except that the first installment
22    period may be longer than the remaining installment periods
23    by not more than 15 days, and the first installment payment
24    may be larger than the remaining installment payments by
25    the amount of finance charges applicable to the extra days.
26    In calculating finance charges under this subsection, when



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



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1    indebted to one or more payday lenders for a period in
2    excess of 180 consecutive days. The term "consecutive days"
3    does not include the date on which a consumer makes the
4    final installment payment.
5    (d) (Blank).
6    (e) No lender may make a payday loan to a consumer if the
7total of all payday loan payments coming due within the first
8calendar month of the loan, when combined with the payment
9amount of all of the consumer's other outstanding payday loans
10coming due within the same month, exceeds the lesser of:
11        (1) $1,000; or
12        (2) in the case of one or more payday loans, 25% of the
13    consumer's gross monthly income; or
14        (3) in the case of one or more installment payday
15    loans, 22.5% of the consumer's gross monthly income; or
16        (4) in the case of a payday loan and an installment
17    payday loan, 22.5% of the consumer's gross monthly income.
18    No loan shall be made to a consumer who has an outstanding
19balance on 2 payday loans, except that, for a period of 12
20months after March 21, 2011 (the effective date of Public Act
2196-936), consumers with an existing CILA loan may be issued an
22installment loan issued under this Act from the company from
23which their CILA loan was issued.
24    (e-5) Except as provided in subsection (c)(i), no lender
25may charge more than $15.50 per $100 loaned on any payday loan,
26or more than $15.50 per $100 on the initial principal balance



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1and on the principal balances scheduled to be outstanding
2during any installment period on any installment payday loan.
3Except for installment payday loans and except as provided in
4Section 2-25, this charge is considered fully earned as of the
5date on which the loan is made. For purposes of determining the
6finance charge earned on an installment payday loan, the
7disclosed annual percentage rate shall be applied to the
8principal balances outstanding from time to time until the loan
9is paid in full, or until the maturity date, whichever occurs
10first. No finance charge may be imposed after the final
11scheduled maturity date.
12    When any loan contract is paid in full, the licensee shall
13refund any unearned finance charge. The unearned finance charge
14that is refunded shall be calculated based on a method that is
15at least as favorable to the consumer as the actuarial method,
16as defined by the federal Truth in Lending Act. The sum of the
17digits or rule of 78ths method of calculating prepaid interest
18refunds is prohibited.
19    (f) A lender may not take or attempt to take an interest in
20any of the consumer's personal property to secure a payday
22    (g) A consumer has the right to redeem a check or any other
23item described in the definition of payday loan under Section
241-10 issued in connection with a payday loan from the lender
25holding the check or other item at any time before the payday
26loan becomes payable by paying the full amount of the check or



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1other item.
2    (h) For the purpose of this Section, "substantially equal
3installment" includes a last regularly scheduled payment that
4may be less than, but no more than 5% larger than, the previous
5scheduled payment according to a disclosed payment schedule
6agreed to by the parties.
7(Source: P.A. 100-201, eff. 8-18-17; 101-563, eff. 8-23-19.)