093_HB2543enr

 
HB2543 Enrolled                      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  $25,000  and 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
 
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 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
 
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 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
 
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 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
 
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 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 Enrolled             -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  $25,000  at  any  time  for  loans  transacted
10    pursuant to this Act.
11    (Source: P.A. 90-437, eff. 1-1-98.)