Full Text of HB5438 100th General Assembly
HB5438 100TH GENERAL ASSEMBLY |
| | 100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018 HB5438 Introduced , by Rep. C.D. Davidsmeyer SYNOPSIS AS INTRODUCED: |
| 815 ILCS 122/1-10 | | 815 ILCS 122/2-5 | |
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Amends the Payday Loan Reform Act. Limits interest on payday loans to an annual percentage rate of 36%. Effective immediately.
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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 Payday Loan Reform Act is amended by | 5 | | changing Sections 1-10 and 2-5 as follows: | 6 | | (815 ILCS 122/1-10)
| 7 | | Sec. 1-10. Definitions. As used in this Act: | 8 | | "Check" means a "negotiable instrument", as defined in | 9 | | Article 3 of the Uniform Commercial Code, that is drawn on a | 10 | | financial institution. | 11 | | "Commercially reasonable method of verification" or | 12 | | "certified database" means a consumer reporting service | 13 | | database certified by the Department as effective in verifying | 14 | | that a proposed loan agreement is permissible under this Act, | 15 | | or, in the absence of the Department's certification, any | 16 | | reasonably reliable written verification by the consumer | 17 | | concerning (i) whether the consumer has any outstanding payday | 18 | | loans, (ii) the principal amount of those outstanding payday | 19 | | loans, and (iii) whether any payday loans have been paid in | 20 | | full by the consumer in the preceding 7 days. | 21 | | "Consumer" means any natural person who, singly or jointly | 22 | | with another consumer, enters into a loan. | 23 | | "Consumer reporting service" means an entity that provides |
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| 1 | | a database certified by the Department. | 2 | | "Department" means the Department of Financial and | 3 | | Professional Regulation. | 4 | | "Secretary" means the Secretary of Financial and | 5 | | Professional Regulation. | 6 | | "Gross monthly income" means monthly income as | 7 | | demonstrated by official documentation of the income, | 8 | | including, but not limited to, a pay stub or a receipt | 9 | | reflecting payment of government benefits, for the period 30 | 10 | | days prior to the date on which the loan is made. | 11 | | "Lender" and "licensee" mean any person or entity, | 12 | | including any affiliate or subsidiary of a lender or licensee, | 13 | | that offers or makes a payday loan, buys a whole or partial | 14 | | interest in a payday loan, arranges a payday loan for a third | 15 | | party, or acts as an agent for a third party in making a payday | 16 | | loan, regardless of whether approval, acceptance, or | 17 | | ratification by the third party is necessary to create a legal | 18 | | obligation for the third party, and includes any other person | 19 | | or entity if the Department determines that the person or | 20 | | entity is engaged in a transaction that is in substance a | 21 | | disguised payday loan or a subterfuge for the purpose of | 22 | | avoiding this Act. | 23 | | "Loan agreement" means a written agreement between a lender | 24 | | and consumer to make a loan to the consumer, regardless of | 25 | | whether any loan proceeds are actually paid to the consumer on | 26 | | the date on which the loan agreement is made. |
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| 1 | | "Member of the military" means a person serving in the | 2 | | armed forces of the United States, the Illinois National Guard, | 3 | | or any reserve component of the armed forces of the United | 4 | | States. "Member of the military" includes those persons engaged | 5 | | in (i) active duty, (ii) training or education under the | 6 | | supervision of the United States preliminary to induction into | 7 | | military service, or (iii) a period of active duty with the | 8 | | State of Illinois under Title 10 or Title 32 of the United | 9 | | States Code pursuant to order of the President or the Governor | 10 | | of the State of Illinois. | 11 | | "Outstanding balance" means the total amount owed by the | 12 | | consumer on a loan to a lender, including all principal, | 13 | | finance charges, fees, and charges of every kind. | 14 | | "Payday loan" or "loan" means a loan with a finance charge | 15 | | exceeding an annual percentage rate of 36% and with a term that | 16 | | does not exceed 120 days, including any transaction conducted | 17 | | via any medium whatsoever, including, but not limited to, | 18 | | paper, facsimile, Internet, or telephone, in which: | 19 | | (1) A lender accepts one or more checks dated on the | 20 | | date written and agrees to hold them for a period of days | 21 | | before deposit or presentment, or accepts one or more | 22 | | checks dated subsequent to the date written and agrees to | 23 | | hold them for deposit; or | 24 | | (2) A lender accepts one or more authorizations to | 25 | | debit a consumer's bank account; or | 26 | | (3) A lender accepts an interest in a consumer's wages, |
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| 1 | | including, but not limited to, a wage assignment. | 2 | | The term "payday loan" includes "installment payday loan", | 3 | | unless otherwise specified in
this Act. | 4 | | "Principal amount" means the amount received by the | 5 | | consumer from the lender due and owing on a loan, excluding any | 6 | | finance charges, interest, fees, or other loan-related | 7 | | charges. | 8 | | "Rollover" means to refinance, renew, amend, or extend a | 9 | | loan beyond its original term.
| 10 | | (Source: P.A. 96-936, eff. 3-21-11 .) | 11 | | (815 ILCS 122/2-5)
| 12 | | Sec. 2-5. Loan terms. | 13 | | (a) Without affecting the right of a consumer to prepay at | 14 | | any time without cost or penalty, no payday loan may have a | 15 | | minimum term of less than 13 days. | 16 | | (b) Except for an installment payday loan as defined in | 17 | | this Section,
no payday loan may be made to a consumer if the | 18 | | loan would result in the consumer being indebted to one or more | 19 | | payday lenders for a period in excess of 45 consecutive days. | 20 | | Except as provided under subsection (c) of this Section and | 21 | | Section 2-40, if a consumer has or has had loans outstanding | 22 | | for a period in excess of 45 consecutive days, no payday lender | 23 | | may offer or make a loan to the consumer for at least 7 | 24 | | calendar days after the date on which the outstanding balance | 25 | | of all payday loans made during the 45 consecutive day period |
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| 1 | | is paid in full. For purposes of this subsection, the term | 2 | | "consecutive days" means a series of continuous calendar days | 3 | | in which the consumer has an outstanding balance on one or more | 4 | | payday loans; however, if a payday loan is made to a consumer | 5 | | within 6 days or less after the outstanding balance of all | 6 | | loans is paid in full, those days are counted as "consecutive | 7 | | days" for purposes of this subsection. | 8 | | (c) Notwithstanding anything in this Act to the contrary, a | 9 | | payday loan
shall also include any installment loan otherwise | 10 | | meeting the definition of
payday loan contained in Section | 11 | | 1-10, but that has a term agreed by the
parties of not less | 12 | | than 112 days and not exceeding 180 days; hereinafter an
| 13 | | "installment payday loan". The following provisions shall | 14 | | apply:
| 15 | | (i) Any installment payday loan must be fully | 16 | | amortizing, with a finance
charge not exceeding an annual | 17 | | percentage rate of 36% calculated on the principal balances | 18 | | scheduled to be outstanding and
be repayable in | 19 | | substantially equal and consecutive installments, | 20 | | according
to a payment schedule agreed by the parties with | 21 | | not less than 13 days and
not more than one month between | 22 | | payments; except that the first installment
period may be | 23 | | longer than the remaining installment periods by not more | 24 | | than
15 days, and the first installment payment may be | 25 | | larger than the remaining
installment payments by the | 26 | | amount of finance charges applicable to the
extra days. In |
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| 1 | | calculating finance charges under this subsection, when | 2 | | the first installment period is longer than the remaining | 3 | | installment periods, the amount of the finance charges | 4 | | applicable to the extra days shall not be greater than | 5 | | $15.50 per $100 of the original principal balance divided | 6 | | by the number of days in a regularly scheduled installment | 7 | | period and multiplied by the number of extra days | 8 | | determined by subtracting the number of days in a regularly | 9 | | scheduled installment period from the number of days in the | 10 | | first installment period. | 11 | | (ii) An installment payday loan may be refinanced by a | 12 | | new installment
payday loan one time during the term of the | 13 | | initial loan; provided that the
total duration of | 14 | | indebtedness on the initial installment payday loan | 15 | | combined
with the total term of indebtedness of the new | 16 | | loan refinancing that initial
loan, shall not exceed 180 | 17 | | days. For purposes of this Act, a refinancing
occurs when | 18 | | an existing installment payday loan is paid from the | 19 | | proceeds of
a new installment payday loan. | 20 | | (iii) In the event an installment payday loan is paid | 21 | | in full prior to
the date on which the last scheduled | 22 | | installment payment before maturity is
due, other than | 23 | | through a refinancing, no licensee may offer or make a | 24 | | payday
loan to the consumer for at least 2 calendar days | 25 | | thereafter. | 26 | | (iv) No installment payday loan may be made to a |
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| 1 | | consumer if the loan would
result in the consumer being | 2 | | indebted to one or more payday lenders for a
period in | 3 | | excess of 180 consecutive days. The term "consecutive days" | 4 | | does not include the date on which a consumer makes the | 5 | | final installment payment. | 6 | | (d) (Blank). | 7 | | (e) No lender may make a payday loan to a consumer if the | 8 | | total of all payday loan payments coming due within the first | 9 | | calendar month of the loan, when combined with the payment | 10 | | amount of all of the consumer's other outstanding payday loans | 11 | | coming due within the same month, exceeds the lesser of: | 12 | | (1) $1,000; or | 13 | | (2) in the case of one or more payday loans, 25% of the | 14 | | consumer's gross monthly income; or | 15 | | (3) in the case of one or more installment payday | 16 | | loans, 22.5% of the consumer's gross monthly income; or | 17 | | (4) in the case of a payday loan and an installment | 18 | | payday loan, 22.5% of the consumer's gross monthly income. | 19 | | No loan shall be made to a consumer who has an outstanding | 20 | | balance on 2 payday loans, except that, for a period of 12 | 21 | | months after March 21, 2011 (the effective date of Public Act | 22 | | 96-936), consumers with an existing CILA loan may be issued an | 23 | | installment loan issued under this Act from the company from | 24 | | which their CILA loan was issued. | 25 | | (e-5) No Except as provided in subsection (c)(i), no lender | 26 | | may impose a finance charge exceeding an annual percentage rate |
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| 1 | | of 36% more than $15.50 per $100 loaned on any payday loan, or | 2 | | more than $15.50 per $100 on the initial principal balance and | 3 | | on the principal balances scheduled to be outstanding during | 4 | | any installment period on any installment payday loan. Except | 5 | | for installment payday loans and except as provided in Section | 6 | | 2-25, this charge is considered fully earned as of the date on | 7 | | which the loan is made. For purposes of determining the finance | 8 | | charge earned on an installment payday loan, the disclosed | 9 | | annual percentage rate shall be applied to the principal | 10 | | balances outstanding from time to time until the loan is paid | 11 | | in full, or until the maturity date, whichever occurs first. No | 12 | | finance charge may be imposed after the final scheduled | 13 | | maturity date. | 14 | | When any loan contract is paid in full, the licensee shall | 15 | | refund any unearned finance charge. The unearned finance charge | 16 | | that is refunded shall be calculated based on a method that is | 17 | | at least as favorable to the consumer as the actuarial method, | 18 | | as defined by the federal Truth in Lending Act. The sum of the | 19 | | digits or rule of 78ths method of calculating prepaid interest | 20 | | refunds is prohibited. | 21 | | (f) A lender may not take or attempt to take an interest in | 22 | | any of the consumer's personal property to secure a payday | 23 | | loan. | 24 | | (g) A consumer has the right to redeem a check or any other | 25 | | item described in the definition of payday loan under Section | 26 | | 1-10 issued in connection with a payday loan from the lender |
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| 1 | | holding the check or other item at any time before the payday | 2 | | loan becomes payable by paying the full amount of the check or | 3 | | other item.
| 4 | | (Source: P.A. 100-201, eff. 8-18-17.)
| 5 | | Section 99. Effective date. This Act takes effect upon | 6 | | becoming law.
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