Full Text of HB4603 97th General Assembly
HB4603 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 HB4603 Introduced 2/1/2012, by Rep. Naomi D. Jakobsson SYNOPSIS AS INTRODUCED: |
| 205 ILCS 670/15 | from Ch. 17, par. 5415 | 205 ILCS 670/17 | from Ch. 17, par. 5423 | 205 ILCS 670/19.3 new | |
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Amends the Consumer Installment Loan Act in relation to title-secured loans. Limits interest on title-secured loans to 36% per year. Provides that the term of a title-secured loan may not be less than 4, nor more than 12, months. Prohibits repossession of a vehicle securing a title-secured loan after an amount equal to 100% of the principal has been repaid. Requires a licensee under the Act to comply with the Fair Debt Collection Practices Act. Prohibits the debiting of bank accounts in connection with title-secured loans and prohibits the making of title-secured loans with respect to motor vehicles that are titled in a state other than Illinois or owned by an obligor who is not a resident of Illinois.
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| | A BILL FOR |
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| 1 | | AN ACT concerning business.
| 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 by | 5 | | changing Sections 15 and 17 and by adding Section 19.3 as | 6 | | follows:
| 7 | | (205 ILCS 670/15) (from Ch. 17, par. 5415)
| 8 | | Sec. 15. Charges permitted.
| 9 | | (a) Every licensee may
lend a principal amount not | 10 | | exceeding $40,000 and, except as to small consumer loans as | 11 | | defined in this Section, may charge,
contract for
and receive | 12 | | thereon interest at an annual percentage rate of no more than | 13 | | 36%, subject to the provisions of this Act . The ; provided, | 14 | | however, that the limitation on the annual percentage rate | 15 | | contained in this subsection (a) applies does not apply to | 16 | | title-secured loans, which are loans upon which interest is | 17 | | charged at an annual percentage rate not exceeding 36%, in | 18 | | which, at commencement, an obligor provides to the licensee, as | 19 | | security for the loan, physical possession of the obligor's | 20 | | title to a motor vehicle, and upon which a licensee may charge, | 21 | | contract for, and receive thereon interest at the rate agreed | 22 | | upon by the licensee and borrower. For purposes of this | 23 | | Section, the annual percentage rate shall be calculated in |
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| 1 | | accordance with the federal Truth in Lending Act.
| 2 | | (b) For purpose of this Section, the following terms shall | 3 | | have the
meanings ascribed herein.
| 4 | | "Applicable interest" for a precomputed loan contract | 5 | | means the amount of
interest attributable to each monthly | 6 | | installment period. It is computed
as if each installment | 7 | | period were one month and any interest charged for
extending | 8 | | the first installment period beyond one month is ignored. The
| 9 | | applicable interest for any monthly installment period is, for | 10 | | loans other than small consumer loans as defined in this | 11 | | Section, that portion of
the precomputed interest that bears | 12 | | the same ratio to the total precomputed
interest as the | 13 | | balances scheduled to be outstanding during that month bear
to | 14 | | the sum of all scheduled monthly outstanding balances in the | 15 | | original
contract. With respect to a small consumer loan, the | 16 | | applicable interest for any installment period is that portion | 17 | | of the precomputed monthly installment account handling charge | 18 | | attributable to the installment period calculated based on a | 19 | | method at least as favorable to the consumer as the actuarial | 20 | | method, as defined by the federal Truth in Lending Act.
| 21 | | "Interest-bearing loan" means a loan in which the debt is
| 22 | | expressed as a principal amount plus interest charged on actual | 23 | | unpaid
principal balances for the time actually outstanding.
| 24 | | "Precomputed loan" means a loan in which the debt is | 25 | | expressed as the sum
of the original principal amount plus | 26 | | interest computed actuarially in
advance, assuming all |
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| 1 | | payments will be made when scheduled.
| 2 | | "Small consumer loan" means a loan upon which interest is | 3 | | charged at an annual percentage rate exceeding 36% and with an | 4 | | amount financed of $4,000 or less. "Small consumer loan" does | 5 | | not include a title-secured loan as defined by subsection (a) | 6 | | of this Section or a payday loan as defined by the Payday Loan | 7 | | Reform Act. | 8 | | (c) Loans may be interest-bearing or precomputed.
| 9 | | (d) To compute time for either interest-bearing or | 10 | | precomputed loans for
the calculation of interest and other | 11 | | purposes, a month shall be a calendar
month and a day shall be | 12 | | considered 1/30th of a month when calculation is
made for a | 13 | | fraction of a month. A month shall be 1/12th of a year. A
| 14 | | calendar month is that period from a given date in one month to | 15 | | the same
numbered date in the following month, and if there is | 16 | | no same numbered
date, to the last day of the following month. | 17 | | When a period of time
includes a month and a fraction of a | 18 | | month, the fraction of the month is
considered to follow the | 19 | | whole month. In the alternative, for
interest-bearing loans, | 20 | | the licensee may charge interest at the rate of
1/365th of the | 21 | | agreed annual rate for each day actually
elapsed.
| 22 | | (d-5) No licensee or other person may condition an | 23 | | extension of credit to a consumer on the consumer's repayment | 24 | | by preauthorized electronic fund transfers. Payment options, | 25 | | including, but not limited to, electronic fund transfers and | 26 | | Automatic Clearing House (ACH) transactions may be offered to |
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| 1 | | consumers as a choice and method of payment chosen by the | 2 | | consumer. | 3 | | (e) With respect to interest-bearing loans:
| 4 | | (1) Interest shall be computed on unpaid principal | 5 | | balances outstanding
from time to time, for the time | 6 | | outstanding, until fully paid. Each
payment shall be | 7 | | applied first to the accumulated interest and the
remainder | 8 | | of the payment applied to the unpaid principal balance; | 9 | | provided
however, that if the amount of the payment is | 10 | | insufficient to pay the
accumulated interest, the unpaid | 11 | | interest continues to accumulate to be
paid from the | 12 | | proceeds of subsequent payments and is not added to the | 13 | | principal
balance.
| 14 | | (2) Interest shall not be payable in advance or | 15 | | compounded. However, if
part or all of the consideration | 16 | | for a new loan contract is the unpaid
principal balance of | 17 | | a prior loan, then the principal amount payable under
the | 18 | | new loan contract may include any unpaid interest which has | 19 | | accrued.
The unpaid principal balance of a precomputed loan | 20 | | is the balance due
after refund or credit of unearned | 21 | | interest as provided in paragraph (f),
clause (3). The | 22 | | resulting loan contract shall be deemed a new and separate
| 23 | | loan transaction for all purposes.
| 24 | | (3) Loans must be fully amortizing and be repayable in | 25 | | substantially equal and consecutive weekly, biweekly, | 26 | | semimonthly, or monthly installments. Notwithstanding this |
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| 1 | | requirement, rates may vary according to an
index that is | 2 | | independently verifiable and beyond the control of the | 3 | | licensee.
| 4 | | (4) The lender or creditor may, if the contract | 5 | | provides, collect a
delinquency or collection charge on | 6 | | each installment in default for a period of
not less than | 7 | | 10 days in an amount not exceeding 5% of the installment on
| 8 | | installments in excess of $200, or $10 on installments of | 9 | | $200 or less, but
only
one delinquency and collection | 10 | | charge may be collected on any installment
regardless of | 11 | | the period during which it remains in default.
| 12 | | (f) With respect to precomputed loans:
| 13 | | (1) Loans shall be repayable in substantially equal and | 14 | | consecutive weekly, biweekly, semimonthly, or
monthly | 15 | | installments of principal and interest combined, except | 16 | | that the
first installment period may be longer than one | 17 | | month by not more than 15
days, and the first installment | 18 | | payment amount may be larger than the
remaining payments by | 19 | | the amount of interest charged for the extra days;
and | 20 | | provided further that monthly installment payment dates | 21 | | may be omitted
to accommodate borrowers with seasonal | 22 | | income.
| 23 | | (2) Payments may be applied to the combined total of | 24 | | principal and
precomputed interest until the loan is fully | 25 | | paid. Payments shall be
applied in the order in which they | 26 | | become due, except that any insurance
proceeds received as |
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| 1 | | a result of any claim made on any insurance, unless
| 2 | | sufficient to prepay the contract in full, may be applied | 3 | | to the unpaid
installments of the total of payments in | 4 | | inverse order.
| 5 | | (3) When any loan contract is paid in full by cash, | 6 | | renewal or
refinancing, or a new loan, one month or more | 7 | | before the final installment
due date, a licensee shall | 8 | | refund or credit the obligor with
the total of
the | 9 | | applicable interest for all fully unexpired installment | 10 | | periods, as
originally scheduled or as deferred, which | 11 | | follow the day of prepayment;
provided, if the prepayment | 12 | | occurs prior to the first installment due date,
the | 13 | | licensee may retain 1/30 of the applicable interest for a | 14 | | first
installment period of one month for each day from the | 15 | | date of the loan to
the date of prepayment, and shall | 16 | | refund or credit the obligor
with the
balance of the total | 17 | | interest contracted for. If the maturity of the loan
is | 18 | | accelerated for any reason and judgment is entered, the | 19 | | licensee shall
credit the borrower with the same refund as | 20 | | if prepayment in full had been
made on the date the | 21 | | judgement is entered.
| 22 | | (4) The lender or creditor may, if the contract | 23 | | provides, collect a
delinquency or collection charge on | 24 | | each installment in default for a period of
not less than | 25 | | 10 days in an amount not exceeding 5% of the installment on
| 26 | | installments in excess of $200, or $10 on installments of |
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| 1 | | $200 or less, but
only
one delinquency or collection charge | 2 | | may be collected on any installment
regardless of the | 3 | | period during which it remains in default.
| 4 | | (5) If the parties agree in writing, either in the loan | 5 | | contract or in a
subsequent agreement, to a deferment of | 6 | | wholly unpaid installments, a
licensee may grant a | 7 | | deferment and may collect a deferment charge as
provided in | 8 | | this Section. A deferment postpones the scheduled due date | 9 | | of
the earliest unpaid installment and all subsequent | 10 | | installments as
originally scheduled, or as previously | 11 | | deferred, for a period equal to the
deferment period. The | 12 | | deferment period is that period during which no
installment | 13 | | is scheduled to be paid by reason of the deferment. The
| 14 | | deferment charge for a one month period may not exceed the | 15 | | applicable
interest for the installment period immediately | 16 | | following the due date of
the last undeferred payment. A | 17 | | proportionate charge may be made for
deferment for periods | 18 | | of more or less than one month. A deferment charge
is | 19 | | earned pro rata during the deferment period and is fully | 20 | | earned on the
last day of the deferment period. Should a | 21 | | loan be prepaid in full during
a deferment period, the | 22 | | licensee shall credit to the obligor a
refund of the | 23 | | unearned deferment charge in addition to any other refund | 24 | | or
credit made for prepayment of the loan in full.
| 25 | | (6) If two or more installments are delinquent one full | 26 | | month or more on
any due date, and if the contract so |
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| 1 | | provides, the licensee may reduce the
unpaid balance by the | 2 | | refund credit which would be required for prepayment
in | 3 | | full on the due date of the most recent maturing | 4 | | installment in default.
Thereafter, and in lieu of any | 5 | | other default or deferment charges, the
agreed rate of | 6 | | interest or, in the case of small consumer loans, interest | 7 | | at the rate of 18% per annum, may be charged on the unpaid | 8 | | balance until fully paid.
| 9 | | (7) Fifteen days after the final installment as | 10 | | originally scheduled or
deferred, the licensee, for any | 11 | | loan contract which has not previously been
converted to | 12 | | interest-bearing under paragraph (f), clause (6), may | 13 | | compute
and charge interest on any balance remaining | 14 | | unpaid, including unpaid
default or deferment charges, at | 15 | | the agreed rate of interest or, in the case of small | 16 | | consumer loans, interest at the rate of 18% per annum, | 17 | | until fully
paid. At the time of payment of said final | 18 | | installment, the licensee shall
give notice to the obligor | 19 | | stating any amounts unpaid.
| 20 | | (Source: P.A. 96-936, eff. 3-21-11 .)
| 21 | | (205 ILCS 670/17) (from Ch. 17, par. 5423)
| 22 | | Sec. 17. Maximum term and amount. | 23 | | (a) Except as provided in subsection (b), the The loan | 24 | | contract shall provide for
repayment of the principal and | 25 | | charges within 181 months from the date of
the loan contract or |
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| 1 | | the last advance, if any, required by the loan
contract. No | 2 | | licensee shall permit an obligor to owe such licensee or an
| 3 | | affiliate (including a corporation owned or managed by the | 4 | | licensee) or
agent of such licensee an aggregate principal | 5 | | amount of more than $40,000 at
any time for loans transacted | 6 | | pursuant to this Act.
| 7 | | (b) A contract for a title-secured loan may provide for | 8 | | repayment of the principal and charges within no fewer than 4 | 9 | | months, and no more than 12 months, from the date of the loan | 10 | | contract. | 11 | | (Source: P.A. 93-264, eff. 1-1-04.)
| 12 | | (205 ILCS 670/19.3 new) | 13 | | Sec. 19.3. Title-secured loans; procedures. | 14 | | (a) A licensee may not repossess a motor vehicle used as | 15 | | collateral for a title-secured loan at any time after the | 16 | | obligor has repaid an amount equal to 100% of the principal | 17 | | loan amount. | 18 | | (b) A licensee must comply with the Fair Debt Collection | 19 | | Practices Act. A licensee may not debit bank accounts in | 20 | | connection with a title-secured loan. A licensee may not accept | 21 | | as security for a title-secured loan any motor vehicle at any | 22 | | time during which the motor vehicle is subject to an | 23 | | outstanding lien. A licensee may not accept as security for a | 24 | | title-secured loan any motor vehicle the title of which is | 25 | | issued by a state other than Illinois or that is owned by an |
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| 1 | | obligor who is not a resident of this State.
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