Full Text of SB1758 101st General Assembly
SB1758 101ST GENERAL ASSEMBLY |
| | 101ST GENERAL ASSEMBLY
State of Illinois
2019 and 2020 SB1758 Introduced 2/15/2019, by Sen. Antonio Muñoz SYNOPSIS AS INTRODUCED: |
| 205 ILCS 670/15 | from Ch. 17, par. 5415 | 815 ILCS 122/2-5 | |
|
Amends the Consumer Installment Loan Act and the Payday Loan Reform Act. Provides that "substantially equal installment" includes a last regularly scheduled payment that is no more than 5% as large as the previous scheduled payment according to a disclosed payment schedule agreed to by the parties. Effective immediately.
|
| |
| | A BILL FOR |
|
| | | SB1758 | | LRB101 10278 AMC 55383 b |
|
| 1 | | AN ACT concerning regulation.
| 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 Section 15 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 and, except as to small consumer loans as | 10 | | defined in this Section, may charge,
contract for
and receive | 11 | | thereon interest at an annual percentage rate of no more than | 12 | | 36%, subject to the provisions of this Act; provided, however, | 13 | | that the limitation on the annual percentage rate contained in | 14 | | this subsection (a) does not apply to title-secured loans, | 15 | | which are loans upon which interest is charged at an annual | 16 | | percentage rate exceeding 36%, in which, at commencement, an | 17 | | obligor provides to the licensee, as security for the loan, | 18 | | physical possession of the obligor's title to a motor vehicle, | 19 | | and upon which a licensee may charge, contract for, and receive | 20 | | thereon interest at the rate agreed upon by the licensee and | 21 | | borrower. For purposes of this Section, the annual percentage | 22 | | rate shall be calculated in accordance with the federal Truth | 23 | | in Lending Act.
|
| | | SB1758 | - 2 - | LRB101 10278 AMC 55383 b |
|
| 1 | | (b) For purpose of this Section, the following terms shall | 2 | | have the
meanings ascribed herein.
| 3 | | "Applicable interest" for a precomputed loan contract | 4 | | means the amount of
interest attributable to each monthly | 5 | | installment period. It is computed
as if each installment | 6 | | period were one month and any interest charged for
extending | 7 | | the first installment period beyond one month is ignored. The
| 8 | | applicable interest for any monthly installment period is, for | 9 | | loans other than small consumer loans as defined in this | 10 | | Section, that portion of
the precomputed interest that bears | 11 | | the same ratio to the total precomputed
interest as the | 12 | | balances scheduled to be outstanding during that month bear
to | 13 | | the sum of all scheduled monthly outstanding balances in the | 14 | | original
contract. With respect to a small consumer loan, the | 15 | | applicable interest for any installment period is that portion | 16 | | of the precomputed monthly installment account handling charge | 17 | | attributable to the installment period calculated based on a | 18 | | method at least as favorable to the consumer as the actuarial | 19 | | method, as defined by the federal Truth in Lending Act.
| 20 | | "Interest-bearing loan" means a loan in which the debt is
| 21 | | expressed as a principal amount plus interest charged on actual | 22 | | unpaid
principal balances for the time actually outstanding.
| 23 | | "Precomputed loan" means a loan in which the debt is | 24 | | expressed as the sum
of the original principal amount plus | 25 | | interest computed actuarially in
advance, assuming all | 26 | | payments will be made when scheduled.
|
| | | SB1758 | - 3 - | LRB101 10278 AMC 55383 b |
|
| 1 | | "Small consumer loan" means a loan upon which interest is | 2 | | charged at an annual percentage rate exceeding 36% and with an | 3 | | amount financed of $4,000 or less. "Small consumer loan" does | 4 | | not include a title-secured loan as defined by subsection (a) | 5 | | of this Section or a payday loan as defined by the Payday Loan | 6 | | Reform Act. | 7 | | "Substantially equal installment" includes a last | 8 | | regularly scheduled payment that is no more than 5% as large as | 9 | | the previous scheduled payment according to a disclosed payment | 10 | | schedule agreed to by the parties. | 11 | | (c) Loans may be interest-bearing or precomputed.
| 12 | | (d) To compute time for either interest-bearing or | 13 | | precomputed loans for
the calculation of interest and other | 14 | | purposes, a month shall be a calendar
month and a day shall be | 15 | | considered 1/30th of a month when calculation is
made for a | 16 | | fraction of a month. A month shall be 1/12th of a year. A
| 17 | | calendar month is that period from a given date in one month to | 18 | | the same
numbered date in the following month, and if there is | 19 | | no same numbered
date, to the last day of the following month. | 20 | | When a period of time
includes a month and a fraction of a | 21 | | month, the fraction of the month is
considered to follow the | 22 | | whole month. In the alternative, for
interest-bearing loans, | 23 | | the licensee may charge interest at the rate of
1/365th of the | 24 | | agreed annual rate for each day actually
elapsed.
| 25 | | (d-5) No licensee or other person may condition an | 26 | | extension of credit to a consumer on the consumer's repayment |
| | | SB1758 | - 4 - | LRB101 10278 AMC 55383 b |
|
| 1 | | by preauthorized electronic fund transfers. Payment options, | 2 | | including, but not limited to, electronic fund transfers and | 3 | | Automatic Clearing House (ACH) transactions may be offered to | 4 | | consumers as a choice and method of payment chosen by the | 5 | | consumer. | 6 | | (e) With respect to interest-bearing loans:
| 7 | | (1) Interest shall be computed on unpaid principal | 8 | | balances outstanding
from time to time, for the time | 9 | | outstanding, until fully paid. Each
payment shall be | 10 | | applied first to the accumulated interest and the
remainder | 11 | | of the payment applied to the unpaid principal balance; | 12 | | provided
however, that if the amount of the payment is | 13 | | insufficient to pay the
accumulated interest, the unpaid | 14 | | interest continues to accumulate to be
paid from the | 15 | | proceeds of subsequent payments and is not added to the | 16 | | principal
balance.
| 17 | | (2) Interest shall not be payable in advance or | 18 | | compounded. However, if
part or all of the consideration | 19 | | for a new loan contract is the unpaid
principal balance of | 20 | | a prior loan, then the principal amount payable under
the | 21 | | new loan contract may include any unpaid interest which has | 22 | | accrued.
The unpaid principal balance of a precomputed loan | 23 | | is the balance due
after refund or credit of unearned | 24 | | interest as provided in paragraph (f),
clause (3). The | 25 | | resulting loan contract shall be deemed a new and separate
| 26 | | loan transaction for all purposes.
|
| | | SB1758 | - 5 - | LRB101 10278 AMC 55383 b |
|
| 1 | | (3) Loans must be fully amortizing and be repayable in | 2 | | substantially equal and consecutive weekly, biweekly, | 3 | | semimonthly, or monthly installments. Notwithstanding this | 4 | | requirement, rates may vary according to an
index that is | 5 | | independently verifiable and beyond the control of the | 6 | | licensee.
| 7 | | (4) The lender or creditor may, if the contract | 8 | | provides, collect a
delinquency or collection charge on | 9 | | each installment in default for a period of
not less than | 10 | | 10 days in an amount not exceeding 5% of the installment on
| 11 | | installments in excess of $200, or $10 on installments of | 12 | | $200 or less, but
only
one delinquency and collection | 13 | | charge may be collected on any installment
regardless of | 14 | | the period during which it remains in default.
| 15 | | (f) With respect to precomputed loans:
| 16 | | (1) Loans shall be repayable in substantially equal and | 17 | | consecutive weekly, biweekly, semimonthly, or
monthly | 18 | | installments of principal and interest combined, except | 19 | | that the
first installment period may be longer than one | 20 | | month by not more than 15
days, and the first installment | 21 | | payment amount may be larger than the
remaining payments by | 22 | | the amount of interest charged for the extra days;
and | 23 | | provided further that monthly installment payment dates | 24 | | may be omitted
to accommodate borrowers with seasonal | 25 | | income.
| 26 | | (2) Payments may be applied to the combined total of |
| | | SB1758 | - 6 - | LRB101 10278 AMC 55383 b |
|
| 1 | | principal and
precomputed interest until the loan is fully | 2 | | paid. Payments shall be
applied in the order in which they | 3 | | become due, except that any insurance
proceeds received as | 4 | | a result of any claim made on any insurance, unless
| 5 | | sufficient to prepay the contract in full, may be applied | 6 | | to the unpaid
installments of the total of payments in | 7 | | inverse order.
| 8 | | (3) When any loan contract is paid in full by cash, | 9 | | renewal or
refinancing, or a new loan, one month or more | 10 | | before the final installment
due date, a licensee shall | 11 | | refund or credit the obligor with
the total of
the | 12 | | applicable interest for all fully unexpired installment | 13 | | periods, as
originally scheduled or as deferred, which | 14 | | follow the day of prepayment;
provided, if the prepayment | 15 | | occurs prior to the first installment due date,
the | 16 | | licensee may retain 1/30 of the applicable interest for a | 17 | | first
installment period of one month for each day from the | 18 | | date of the loan to
the date of prepayment, and shall | 19 | | refund or credit the obligor
with the
balance of the total | 20 | | interest contracted for. If the maturity of the loan
is | 21 | | accelerated for any reason and judgment is entered, the | 22 | | licensee shall
credit the borrower with the same refund as | 23 | | if prepayment in full had been
made on the date the | 24 | | judgement is entered.
| 25 | | (4) The lender or creditor may, if the contract | 26 | | provides, collect a
delinquency or collection charge on |
| | | SB1758 | - 7 - | LRB101 10278 AMC 55383 b |
|
| 1 | | each installment in default for a period of
not less than | 2 | | 10 days in an amount not exceeding 5% of the installment on
| 3 | | installments in excess of $200, or $10 on installments of | 4 | | $200 or less, but
only
one delinquency or collection charge | 5 | | may be collected on any installment
regardless of the | 6 | | period during which it remains in default.
| 7 | | (5) If the parties agree in writing, either in the loan | 8 | | contract or in a
subsequent agreement, to a deferment of | 9 | | wholly unpaid installments, a
licensee may grant a | 10 | | deferment and may collect a deferment charge as
provided in | 11 | | this Section. A deferment postpones the scheduled due date | 12 | | of
the earliest unpaid installment and all subsequent | 13 | | installments as
originally scheduled, or as previously | 14 | | deferred, for a period equal to the
deferment period. The | 15 | | deferment period is that period during which no
installment | 16 | | is scheduled to be paid by reason of the deferment. The
| 17 | | deferment charge for a one month period may not exceed the | 18 | | applicable
interest for the installment period immediately | 19 | | following the due date of
the last undeferred payment. A | 20 | | proportionate charge may be made for
deferment for periods | 21 | | of more or less than one month. A deferment charge
is | 22 | | earned pro rata during the deferment period and is fully | 23 | | earned on the
last day of the deferment period. Should a | 24 | | loan be prepaid in full during
a deferment period, the | 25 | | licensee shall credit to the obligor a
refund of the | 26 | | unearned deferment charge in addition to any other refund |
| | | SB1758 | - 8 - | LRB101 10278 AMC 55383 b |
|
| 1 | | or
credit made for prepayment of the loan in full.
| 2 | | (6) If two or more installments are delinquent one full | 3 | | month or more on
any due date, and if the contract so | 4 | | provides, the licensee may reduce the
unpaid balance by the | 5 | | refund credit which would be required for prepayment
in | 6 | | full on the due date of the most recent maturing | 7 | | installment in default.
Thereafter, and in lieu of any | 8 | | other default or deferment charges, the
agreed rate of | 9 | | interest or, in the case of small consumer loans, interest | 10 | | at the rate of 18% per annum, may be charged on the unpaid | 11 | | balance until fully paid.
| 12 | | (7) Fifteen days after the final installment as | 13 | | originally scheduled or
deferred, the licensee, for any | 14 | | loan contract which has not previously been
converted to | 15 | | interest-bearing under paragraph (f), clause (6), may | 16 | | compute
and charge interest on any balance remaining | 17 | | unpaid, including unpaid
default or deferment charges, at | 18 | | the agreed rate of interest or, in the case of small | 19 | | consumer loans, interest at the rate of 18% per annum, | 20 | | until fully
paid. At the time of payment of said final | 21 | | installment, the licensee shall
give notice to the obligor | 22 | | stating any amounts unpaid.
| 23 | | (Source: P.A. 96-936, eff. 3-21-11 .)
| 24 | | Section 10. The Payday Loan Reform Act is amended by | 25 | | changing Section 2-5 as follows: |
| | | SB1758 | - 9 - | LRB101 10278 AMC 55383 b |
|
| 1 | | (815 ILCS 122/2-5)
| 2 | | Sec. 2-5. Loan terms. | 3 | | (a) Without affecting the right of a consumer to prepay at | 4 | | any time without cost or penalty, no payday loan may have a | 5 | | minimum term of less than 13 days. | 6 | | (b) Except for an installment payday loan as defined in | 7 | | this Section,
no payday loan may be made to a consumer if the | 8 | | loan would result in the consumer being indebted to one or more | 9 | | payday lenders for a period in excess of 45 consecutive days. | 10 | | Except as provided under subsection (c) of this Section and | 11 | | Section 2-40, if a consumer has or has had loans outstanding | 12 | | for a period in excess of 45 consecutive days, no payday lender | 13 | | may offer or make a loan to the consumer for at least 7 | 14 | | calendar days after the date on which the outstanding balance | 15 | | of all payday loans made during the 45 consecutive day period | 16 | | is paid in full. For purposes of this subsection, the term | 17 | | "consecutive days" means a series of continuous calendar days | 18 | | in which the consumer has an outstanding balance on one or more | 19 | | payday loans; however, if a payday loan is made to a consumer | 20 | | within 6 days or less after the outstanding balance of all | 21 | | loans is paid in full, those days are counted as "consecutive | 22 | | days" for purposes of this subsection. | 23 | | (c) Notwithstanding anything in this Act to the contrary, a | 24 | | payday loan
shall also include any installment loan otherwise | 25 | | meeting the definition of
payday loan contained in Section |
| | | SB1758 | - 10 - | LRB101 10278 AMC 55383 b |
|
| 1 | | 1-10, but that has a term agreed by the
parties of not less | 2 | | than 112 days and not exceeding 180 days; hereinafter an
| 3 | | "installment payday loan". The following provisions shall | 4 | | apply:
| 5 | | (i) Any installment payday loan must be fully | 6 | | amortizing, with a finance
charge calculated on the | 7 | | principal balances scheduled to be outstanding and
be | 8 | | repayable in substantially equal and consecutive | 9 | | installments, according
to a payment schedule agreed by the | 10 | | parties with not less than 13 days and
not more than one | 11 | | month between payments; except that the first installment
| 12 | | period may be longer than the remaining installment periods | 13 | | by not more than
15 days, and the first installment payment | 14 | | may be larger than the remaining
installment payments by | 15 | | the amount of finance charges applicable to the
extra days. | 16 | | In calculating finance charges under this subsection, when | 17 | | the first installment period is longer than the remaining | 18 | | installment periods, the amount of the finance charges | 19 | | applicable to the extra days shall not be greater than | 20 | | $15.50 per $100 of the original principal balance divided | 21 | | by the number of days in a regularly scheduled installment | 22 | | period and multiplied by the number of extra days | 23 | | determined by subtracting the number of days in a regularly | 24 | | scheduled installment period from the number of days in the | 25 | | first installment period. | 26 | | (ii) An installment payday loan may be refinanced by a |
| | | SB1758 | - 11 - | LRB101 10278 AMC 55383 b |
|
| 1 | | new installment
payday loan one time during the term of the | 2 | | initial loan; provided that the
total duration of | 3 | | indebtedness on the initial installment payday loan | 4 | | combined
with the total term of indebtedness of the new | 5 | | loan refinancing that initial
loan, shall not exceed 180 | 6 | | days. For purposes of this Act, a refinancing
occurs when | 7 | | an existing installment payday loan is paid from the | 8 | | proceeds of
a new installment payday loan. | 9 | | (iii) In the event an installment payday loan is paid | 10 | | in full prior to
the date on which the last scheduled | 11 | | installment payment before maturity is
due, other than | 12 | | through a refinancing, no licensee may offer or make a | 13 | | payday
loan to the consumer for at least 2 calendar days | 14 | | thereafter. | 15 | | (iv) No installment payday loan may be made to a | 16 | | consumer if the loan would
result in the consumer being | 17 | | indebted to one or more payday lenders for a
period in | 18 | | excess of 180 consecutive days. The term "consecutive days" | 19 | | does not include the date on which a consumer makes the | 20 | | final installment payment. | 21 | | (d) (Blank). | 22 | | (e) No lender may make a payday loan to a consumer if the | 23 | | total of all payday loan payments coming due within the first | 24 | | calendar month of the loan, when combined with the payment | 25 | | amount of all of the consumer's other outstanding payday loans | 26 | | coming due within the same month, exceeds the lesser of: |
| | | SB1758 | - 12 - | LRB101 10278 AMC 55383 b |
|
| 1 | | (1) $1,000; or | 2 | | (2) in the case of one or more payday loans, 25% of the | 3 | | consumer's gross monthly income; or | 4 | | (3) in the case of one or more installment payday | 5 | | loans, 22.5% of the consumer's gross monthly income; or | 6 | | (4) in the case of a payday loan and an installment | 7 | | payday loan, 22.5% of the consumer's gross monthly income. | 8 | | No loan shall be made to a consumer who has an outstanding | 9 | | balance on 2 payday loans, except that, for a period of 12 | 10 | | months after March 21, 2011 (the effective date of Public Act | 11 | | 96-936), consumers with an existing CILA loan may be issued an | 12 | | installment loan issued under this Act from the company from | 13 | | which their CILA loan was issued. | 14 | | (e-5) Except as provided in subsection (c)(i), no lender | 15 | | may charge more than $15.50 per $100 loaned on any payday loan, | 16 | | or more than $15.50 per $100 on the initial principal balance | 17 | | and on the principal balances scheduled to be outstanding | 18 | | during any installment period on any installment payday loan. | 19 | | Except for installment payday loans and except as provided in | 20 | | Section 2-25, this charge is considered fully earned as of the | 21 | | date on which the loan is made. For purposes of determining the | 22 | | finance charge earned on an installment payday loan, the | 23 | | disclosed annual percentage rate shall be applied to the | 24 | | principal balances outstanding from time to time until the loan | 25 | | is paid in full, or until the maturity date, whichever occurs | 26 | | first. No finance charge may be imposed after the final |
| | | SB1758 | - 13 - | LRB101 10278 AMC 55383 b |
|
| 1 | | scheduled maturity date. | 2 | | When any loan contract is paid in full, the licensee shall | 3 | | refund any unearned finance charge. The unearned finance charge | 4 | | that is refunded shall be calculated based on a method that is | 5 | | at least as favorable to the consumer as the actuarial method, | 6 | | as defined by the federal Truth in Lending Act. The sum of the | 7 | | digits or rule of 78ths method of calculating prepaid interest | 8 | | refunds is prohibited. | 9 | | (f) A lender may not take or attempt to take an interest in | 10 | | any of the consumer's personal property to secure a payday | 11 | | loan. | 12 | | (g) A consumer has the right to redeem a check or any other | 13 | | item described in the definition of payday loan under Section | 14 | | 1-10 issued in connection with a payday loan from the lender | 15 | | holding the check or other item at any time before the payday | 16 | | loan becomes payable by paying the full amount of the check or | 17 | | other item.
| 18 | | (h) For the purpose of this Section, "substantially equal | 19 | | installment" includes a last regularly scheduled payment that | 20 | | is no more than 5% as large as the previous scheduled payment | 21 | | according to a disclosed payment schedule agreed to by the | 22 | | parties. | 23 | | (Source: P.A. 100-201, eff. 8-18-17.)
| 24 | | Section 99. Effective date. This Act takes effect upon | 25 | | becoming law. |
|