Payday Loans

Illinois Payday Loan Laws

Illinois is one of those few states that have taken some serious steps in order to protect its consumers from the danger of payday loans. Though as per Illinois payday loan laws, it is quite legal to offer these types of lending programs, but there are certain restrictions lenders, payday debt collectors and borrowers must follow. Though nothing much have done to reduce the interest rates. Lenders in the state of Illinois are still charging interest at a 3-digit APR. Still, there are plenty of things that the laws have made in favor of the borrowers. Following is a brief rundown on it.

About Payday Debt Collection Practices

First thing first, it is very important for you to keep in mind that the Fair Debt Collection Practices Act of the United States of America applies to payday lending as well. The lenders and payday debt collectors cannot harass you in any manner, physically or psychologically, or use unfair means to force the repayment. Payday lenders are often very aggressive in their debt collection practices. They may threaten you with legal actions, such as a criminal lawsuit. They may tell you that they will send you to jail if you do not repay the loan. As per Illinois payday loan laws, non-payment of payday loans is not a criminal offence. No criminal charges can be placed against you if you are unable to make the repayment, which means you cannot be sent to jail just because you cannot repay a payday loan. The lenders and debt collectors however can file civil lawsuits against you, which may result in wage garnishment, liquidation of certain assets, or even a forced bankruptcy in the most extreme cases. But, all such things are possible only after a court order. Your lenders cannot take such actions against you voluntarily.

Collection Fees

A NSF fee of up to $25 can be charged on an outstanding payday loan with collection status; the presentment limit is two.

No Rollovers

Illinois payday loan laws strictly prohibit automatic rollover or renewal of loans. It means, if you do not pay the loan off on the set due date, no additional interest or other financial charges can be added to your outstanding balance except the one-time collection fee of $25 (as mentioned above).

Mandatory Repayment Plan

The state of Illinois has also made it mandatory for the payday lenders to allow the defaulters (the borrowers who do not make the repayment on the set due date) to pay the loan in several small monthly installments as per a new affordable repayment plan. If your creditor refuses to accept or offer any repayment plan, you can file a complaint against them with the Illinois Division of Financial Institutions.

Maximum Loan Amount

The maximum amount of money that payday lenders can offer as part of their short-term cash advance programs is either 25% of the gross monthly income of the borrower or $1000, whichever is lesser.

A Maximum Of Two Outstanding Payday Loans At A Time

As per Illinois payday loan laws, you cannot have more than two outstanding payday loans at a time. But again, the aggregate total must not exceed the set limit for the maximum loan amount (as mentioned above). Besides that, there is also a provision for cooling-off period, as per which, a payday lenders in Idaho must wait for at least seven days after forty-five consecutive loan days before issuing another cash advance to a borrower.

Rates And Finance Charges

The interest charged on a $100 of loan issued for a 14-day period must not exceed $15.50. If we calculate the Annual Percentage Rate, we find it a whopping 403%. Besides that, As per Illinois payday loan laws, the lenders are also allowed to charge additional finance charges that are also limited to a maximum amount of $15.50. This way, if you borrow a $100 of loan for 14 days, you may have to repay up to $131. Likewise, for a $1000 of loan, the outstanding due after 14 days can be up to $1310, which means $310 only as interest and other finance charges. Therefore, you are strongly recommended to be very careful if you are considering borrowing these easy yet risky loans.

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