2011/07/03

New Laws For Payday Cash Advance Loan In Illinois

Though payday cash advance loan programs are still legal in the state of Illinois, the laws regarding the same are getting much stricter with every passing. Recently, the state government has passed a new law to cover the loopholes that were there in the existing payday loan laws in Illinois. The new laws have been passed by the Illinois General Assembly in an attempt to curb payday lending. In the last few years, wage theft had become very common in this state. Wage theft is a kind of theft that a vast majority of payday lenders are engaged in; they have designed the terms and conditions of their loan programs in such a way, where borrowers provide them the right to deduct money directly from their wage account as part of the repayment procedure. The new law has now made it very difficult for the payday loan companies to conduct such unfair and unscrupulous activities.

HB 537

HB 537 is one of those new laws for payday cash advance loan programs that have recently been passed in Illinois unanimously through both houses of legislature. The HB 537 legislation reins in payday loan companies in several ways. For example, now onwards it will be illegal for them to charge more than 99% as interest on their short-term cash advance loans. The loopholes though are still there because it has not been made clear whether the restriction regarding interest rates applies on a per-annum basis or just flatly on the total amount of loan issued irrespective of the repayment period. Payday lenders often advertise their rates as “attractive”, claiming that they charge very small amount of fee, but they often charge interest and other fees quite deceptively.

Other restrictions that have been imposed on payday cash advance loan programs through the HB 537 legislation include mandatory installment plans for repayment. Besides that, the maximum loan amount that they can issue to a borrower should also now depend on the borrower’s income level.

Though the changes brought by the new laws do not seem to bring a drastic change in the current system of payday lending, it will still definitely make a difference. In short, things have now become a little more difficult for payday loan companies. Even consumers will now have to work harder to qualify for a payday cash advance in this state.

In

fact, it has almost become a recent trend, where every state in the United States of America comes up with a new payday loan law and legislation every now and then. Sixteen states have already banned this form of lending while the majority of other states are in the process of passing new laws in an effort to restrain the predatory payday cash advance loan programs.

Filed under Payday Loan Laws