Full Text of SB2843 100th General Assembly
SB2843 100TH GENERAL ASSEMBLY |
| | 100TH GENERAL ASSEMBLY
State of Illinois
2017 and 2018 SB2843 Introduced 2/13/2018, by Sen. Kimberly A. Lightford SYNOPSIS AS INTRODUCED: |
| 205 ILCS 670/1 | from Ch. 17, par. 5401 | 205 ILCS 670/15 | from Ch. 17, par. 5415 | 205 ILCS 670/15f new | |
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Amends the Consumer Installment Loan Act. Defines "title-secured loan". Provides that for title-secured loans entered into or renewed on or after the effective date of the Act: (i) a licensee shall not contract for or receive a charge exceeding 36% annual percentage rate on the unpaid balance of the amount financed for a title-secured loan; (ii) the loan contract shall provide for repayment of the principal and charges within specified maximum loan terms; (iii) upon or after default, a licensee shall not charge a borrower any finance charges, interest, fees, or charges of any kind; and (iv) the loan may be refinanced if the original principal of the loan has been reduced by at least 60%. Provides that nothing in these provisions abrogates a borrower's right to collect any surplus arising from the sale of a motor vehicle under the Uniform Commercial Code.
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| | A BILL FOR |
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| 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 Sections 1 and 15 and by adding Section 15f as | 6 | | follows:
| 7 | | (205 ILCS 670/1) (from Ch. 17, par. 5401)
| 8 | | Sec. 1. License required to engage in business. No person, | 9 | | partnership, association, limited liability
company, or | 10 | | corporation shall engage in
the business of making loans of | 11 | | money in a principal amount not
exceeding $40,000, and charge, | 12 | | contract for, or receive on any
such loan a
greater rate of | 13 | | interest, discount, or consideration therefor than the
lender | 14 | | would be permitted by law to charge if he were not a licensee
| 15 | | hereunder, except as authorized by this Act after first | 16 | | obtaining a license
from the Director of Financial Institutions | 17 | | (hereinafter called the Director). No licensee, or employee or | 18 | | affiliate thereof, that is licensed under the Payday Loan | 19 | | Reform Act shall obtain a license under this Act except that a | 20 | | licensee under the Payday Loan Reform Act may obtain a license | 21 | | under this Act for the exclusive purpose and use of making | 22 | | title-secured loans, as defined in subsection (a) of Section | 23 | | 15f 15 of this Act and governed by Title 38, Section 110.300 of |
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| 1 | | the Illinois Administrative Code. For the purpose of this | 2 | | Section, "affiliate" means any person or entity that directly | 3 | | or indirectly controls, is controlled by, or shares control | 4 | | with another person or entity. A person or entity has control | 5 | | over another if the person or entity has an ownership interest | 6 | | of 25% or more in the other.
| 7 | | (Source: P.A. 96-936, eff. 3-21-11; 97-420, eff. 1-1-12.)
| 8 | | (205 ILCS 670/15) (from Ch. 17, par. 5415)
| 9 | | Sec. 15. Charges permitted.
| 10 | | (a) Every licensee may
lend a principal amount not | 11 | | exceeding $40,000 and, except as to small consumer loans as | 12 | | defined in this Section, may charge,
contract for
and receive | 13 | | thereon interest at an annual percentage rate of no more than | 14 | | 36%, subject to the provisions of this Act ; provided, however, | 15 | | that the limitation on the annual percentage rate contained in | 16 | | this subsection (a) does not apply to title-secured loans, | 17 | | which are loans upon which interest is charged at an annual | 18 | | percentage rate exceeding 36%, in which, at commencement, an | 19 | | obligor provides to the licensee, as security for the loan, | 20 | | physical possession of the obligor's title to a motor vehicle, | 21 | | and upon which a licensee may charge, contract for, and receive | 22 | | thereon interest at the rate agreed upon by the licensee and | 23 | | borrower . For purposes of this Section, the annual percentage | 24 | | rate shall be calculated in accordance with the federal Truth | 25 | | in Lending Act.
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| 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.
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| 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 15f or a payday loan as defined by the Payday | 6 | | Loan Reform Act. | 7 | | (c) Loans may be interest-bearing or precomputed.
| 8 | | (d) To compute time for either interest-bearing or | 9 | | precomputed loans for
the calculation of interest and other | 10 | | purposes, a month shall be a calendar
month and a day shall be | 11 | | considered 1/30th of a month when calculation is
made for a | 12 | | fraction of a month. A month shall be 1/12th of a year. A
| 13 | | calendar month is that period from a given date in one month to | 14 | | the same
numbered date in the following month, and if there is | 15 | | no same numbered
date, to the last day of the following month. | 16 | | When a period of time
includes a month and a fraction of a | 17 | | month, the fraction of the month is
considered to follow the | 18 | | whole month. In the alternative, for
interest-bearing loans, | 19 | | the licensee may charge interest at the rate of
1/365th of the | 20 | | agreed annual rate for each day actually
elapsed.
| 21 | | (d-5) No licensee or other person may condition an | 22 | | extension of credit to a consumer on the consumer's repayment | 23 | | by preauthorized electronic fund transfers. Payment options, | 24 | | including, but not limited to, electronic fund transfers and | 25 | | Automatic Clearing House (ACH) transactions may be offered to | 26 | | consumers as a choice and method of payment chosen by the |
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| 1 | | consumer. | 2 | | (e) With respect to interest-bearing loans:
| 3 | | (1) Interest shall be computed on unpaid principal | 4 | | balances outstanding
from time to time, for the time | 5 | | outstanding, until fully paid. Each
payment shall be | 6 | | applied first to the accumulated interest and the
remainder | 7 | | of the payment applied to the unpaid principal balance; | 8 | | provided
however, that if the amount of the payment is | 9 | | insufficient to pay the
accumulated interest, the unpaid | 10 | | interest continues to accumulate to be
paid from the | 11 | | proceeds of subsequent payments and is not added to the | 12 | | principal
balance.
| 13 | | (2) Interest shall not be payable in advance or | 14 | | compounded. However, if
part or all of the consideration | 15 | | for a new loan contract is the unpaid
principal balance of | 16 | | a prior loan, then the principal amount payable under
the | 17 | | new loan contract may include any unpaid interest which has | 18 | | accrued.
The unpaid principal balance of a precomputed loan | 19 | | is the balance due
after refund or credit of unearned | 20 | | interest as provided in paragraph (f),
clause (3). The | 21 | | resulting loan contract shall be deemed a new and separate
| 22 | | loan transaction for all purposes.
| 23 | | (3) Loans must be fully amortizing and be repayable in | 24 | | substantially equal and consecutive weekly, biweekly, | 25 | | semimonthly, or monthly installments. Notwithstanding this | 26 | | requirement, rates may vary according to an
index that is |
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| 1 | | independently verifiable and beyond the control of the | 2 | | licensee.
| 3 | | (4) The lender or creditor may, if the contract | 4 | | provides, collect a
delinquency or collection charge on | 5 | | each installment in default for a period of
not less than | 6 | | 10 days in an amount not exceeding 5% of the installment on
| 7 | | installments in excess of $200, or $10 on installments of | 8 | | $200 or less, but
only
one delinquency and collection | 9 | | charge may be collected on any installment
regardless of | 10 | | the period during which it remains in default.
| 11 | | (f) With respect to precomputed loans:
| 12 | | (1) Loans shall be repayable in substantially equal and | 13 | | consecutive weekly, biweekly, semimonthly, or
monthly | 14 | | installments of principal and interest combined, except | 15 | | that the
first installment period may be longer than one | 16 | | month by not more than 15
days, and the first installment | 17 | | payment amount may be larger than the
remaining payments by | 18 | | the amount of interest charged for the extra days;
and | 19 | | provided further that monthly installment payment dates | 20 | | may be omitted
to accommodate borrowers with seasonal | 21 | | income.
| 22 | | (2) Payments may be applied to the combined total of | 23 | | principal and
precomputed interest until the loan is fully | 24 | | paid. Payments shall be
applied in the order in which they | 25 | | become due, except that any insurance
proceeds received as | 26 | | a result of any claim made on any insurance, unless
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| 1 | | sufficient to prepay the contract in full, may be applied | 2 | | to the unpaid
installments of the total of payments in | 3 | | inverse order.
| 4 | | (3) When any loan contract is paid in full by cash, | 5 | | renewal or
refinancing, or a new loan, one month or more | 6 | | before the final installment
due date, a licensee shall | 7 | | refund or credit the obligor with
the total of
the | 8 | | applicable interest for all fully unexpired installment | 9 | | periods, as
originally scheduled or as deferred, which | 10 | | follow the day of prepayment;
provided, if the prepayment | 11 | | occurs prior to the first installment due date,
the | 12 | | licensee may retain 1/30 of the applicable interest for a | 13 | | first
installment period of one month for each day from the | 14 | | date of the loan to
the date of prepayment, and shall | 15 | | refund or credit the obligor
with the
balance of the total | 16 | | interest contracted for. If the maturity of the loan
is | 17 | | accelerated for any reason and judgment is entered, the | 18 | | licensee shall
credit the borrower with the same refund as | 19 | | if prepayment in full had been
made on the date the | 20 | | judgement is entered.
| 21 | | (4) The lender or creditor may, if the contract | 22 | | provides, collect a
delinquency or collection charge on | 23 | | each installment in default for a period of
not less than | 24 | | 10 days in an amount not exceeding 5% of the installment on
| 25 | | installments in excess of $200, or $10 on installments of | 26 | | $200 or less, but
only
one delinquency or collection charge |
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| 1 | | may be collected on any installment
regardless of the | 2 | | period during which it remains in default.
| 3 | | (5) If the parties agree in writing, either in the loan | 4 | | contract or in a
subsequent agreement, to a deferment of | 5 | | wholly unpaid installments, a
licensee may grant a | 6 | | deferment and may collect a deferment charge as
provided in | 7 | | this Section. A deferment postpones the scheduled due date | 8 | | of
the earliest unpaid installment and all subsequent | 9 | | installments as
originally scheduled, or as previously | 10 | | deferred, for a period equal to the
deferment period. The | 11 | | deferment period is that period during which no
installment | 12 | | is scheduled to be paid by reason of the deferment. The
| 13 | | deferment charge for a one month period may not exceed the | 14 | | applicable
interest for the installment period immediately | 15 | | following the due date of
the last undeferred payment. A | 16 | | proportionate charge may be made for
deferment for periods | 17 | | of more or less than one month. A deferment charge
is | 18 | | earned pro rata during the deferment period and is fully | 19 | | earned on the
last day of the deferment period. Should a | 20 | | loan be prepaid in full during
a deferment period, the | 21 | | licensee shall credit to the obligor a
refund of the | 22 | | unearned deferment charge in addition to any other refund | 23 | | or
credit made for prepayment of the loan in full.
| 24 | | (6) If two or more installments are delinquent one full | 25 | | month or more on
any due date, and if the contract so | 26 | | provides, the licensee may reduce the
unpaid balance by the |
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| 1 | | refund credit which would be required for prepayment
in | 2 | | full on the due date of the most recent maturing | 3 | | installment in default.
Thereafter, and in lieu of any | 4 | | other default or deferment charges, the
agreed rate of | 5 | | interest or, in the case of small consumer loans, interest | 6 | | at the rate of 18% per annum, may be charged on the unpaid | 7 | | balance until fully paid.
| 8 | | (7) Fifteen days after the final installment as | 9 | | originally scheduled or
deferred, the licensee, for any | 10 | | loan contract which has not previously been
converted to | 11 | | interest-bearing under paragraph (f), clause (6), may | 12 | | compute
and charge interest on any balance remaining | 13 | | unpaid, including unpaid
default or deferment charges, at | 14 | | the agreed rate of interest or, in the case of small | 15 | | consumer loans, interest at the rate of 18% per annum, | 16 | | until fully
paid. At the time of payment of said final | 17 | | installment, the licensee shall
give notice to the obligor | 18 | | stating any amounts unpaid.
| 19 | | (Source: P.A. 96-936, eff. 3-21-11 .)
| 20 | | (205 ILCS 670/15f new) | 21 | | Sec. 15f. Title-secured loans. | 22 | | (a) This Section applies exclusively to title-secured | 23 | | loans entered into or renewed on or after the effective date of | 24 | | this amendatory Act of the 100th General Assembly. | 25 | | (b) As used in this Section, "title-secured loan" means a |
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| 1 | | loan in which, at commencement, an obligor provides to a | 2 | | licensee, as security for the loan, physical possession of the | 3 | | obligor's title to a motor vehicle, and upon which a licensee | 4 | | may charge, contract for, and receive thereon interest at the | 5 | | rate agreed upon by the licensee and the obligor. | 6 | | (c) Notwithstanding any other provision of law: | 7 | | (1) a licensee shall not contract for or receive a | 8 | | charge exceeding a 36% annual percentage rate on the unpaid | 9 | | balance of the amount financed for a title-secured loan; | 10 | | for the purposes of this paragraph (1), the annual | 11 | | percentage rate shall be calculated as such rate is | 12 | | calculated using the system for calculating a military | 13 | | annual percentage rate under Section 232.4 of Title 32 of | 14 | | the Code of Federal Regulations, as in effect on the | 15 | | effective date of this amendatory Act of the 100th General | 16 | | Assembly; and | 17 | | (2) the loan contract shall provide for repayment of | 18 | | the principal and charges within the following maximum loan | 19 | | terms from the date of the loan contract or the last | 20 | | advance, if any, required by the loan contract: | |
21 | | Amount financed | Maximum loan term | |
22 | | $0-$1,000 | 12 months | |
23 | | $1,000.01-$2,000 | 18 months | |
24 | | $2,000.01-$3,000 | 24 months | |
25 | | $3,000.01-$4,000 | 30 months |
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| 1 | | (3) upon and after default, a licensee shall not charge | 2 | | a borrower any finance charges, interest, fees, or charges | 3 | | of any kind. | 4 | | (4) the loan may be refinanced, but only when the | 5 | | original principal of the loan has been reduced by at least | 6 | | 60%. The principal amount of the new title-secured loan may | 7 | | not exceed the total outstanding balance of the refinanced | 8 | | loan. | 9 | | Nothing in this Section abrogates a borrower's right to | 10 | | collect any surplus arising from the sale of a motor vehicle | 11 | | pursuant to Article 9 of the Uniform Commercial Code. | 12 | | (d) The Director shall, within one year after the effective | 13 | | date of this amendatory Act of the 100th General Assembly, | 14 | | adopt rules consistent with this Section and repeal or amend | 15 | | rules that are inconsistent with this Section. The adoption, | 16 | | amendment, or repeal of rules shall be in conformity with the | 17 | | requirements of the Illinois Administrative Procedure Act.
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