Bill Text: IL HB3002 | 2019-2020 | 101st General Assembly | Introduced

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Bill Title: Amends the Payday Loan Reform Act. Limits interest on payday loans to an annual percentage rate of 36%. Effective immediately.

Spectrum: Partisan Bill (Republican 2-0)

Status: (Introduced - Dead) 2019-03-29 - House Committee Amendment No. 1 Rule 19(c) / Re-referred to Rules Committee [HB3002 Detail]

Download: Illinois-2019-HB3002-Introduced.html

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101ST GENERAL ASSEMBLY State of Illinois 2019 and 2020 HB3002 Introduced , by Rep. C.D. Davidsmeyer SYNOPSIS AS INTRODUCED:
815 ILCS 122/1-10
815 ILCS 122/2-5
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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AN ACT concerning business.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Payday Loan Reform Act is amended by
changing Sections 1-10 and 2-5 as follows:
(815 ILCS 122/1-10)
Sec. 1-10. Definitions. As used in this Act:
"Check" means a "negotiable instrument", as defined in
Article 3 of the Uniform Commercial Code, that is drawn on a
financial institution.
"Commercially reasonable method of verification" or
"certified database" means a consumer reporting service
database certified by the Department as effective in verifying
that a proposed loan agreement is permissible under this Act,
or, in the absence of the Department's certification, any
reasonably reliable written verification by the consumer
concerning (i) whether the consumer has any outstanding payday
loans, (ii) the principal amount of those outstanding payday
loans, and (iii) whether any payday loans have been paid in
full by the consumer in the preceding 7 days.
"Consumer" means any natural person who, singly or jointly
with another consumer, enters into a loan.
"Consumer reporting service" means an entity that provides

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a database certified by the Department.
"Department" means the Department of Financial and
Professional Regulation.
"Secretary" means the Secretary of Financial and
Professional Regulation.
"Gross monthly income" means monthly income as
demonstrated by official documentation of the income,
including, but not limited to, a pay stub or a receipt
reflecting payment of government benefits, for the period 30
days prior to the date on which the loan is made.
"Lender" and "licensee" mean any person or entity,
including any affiliate or subsidiary of a lender or licensee,
that offers or makes a payday loan, buys a whole or partial
interest in a payday loan, arranges a payday loan for a third
party, or acts as an agent for a third party in making a payday
loan, regardless of whether approval, acceptance, or
ratification by the third party is necessary to create a legal
obligation for the third party, and includes any other person
or entity if the Department determines that the person or
entity is engaged in a transaction that is in substance a
disguised payday loan or a subterfuge for the purpose of
avoiding this Act.
"Loan agreement" means a written agreement between a lender
and consumer to make a loan to the consumer, regardless of
whether any loan proceeds are actually paid to the consumer on
the date on which the loan agreement is made.

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"Member of the military" means a person serving in the
armed forces of the United States, the Illinois National Guard,
or any reserve component of the armed forces of the United
States. "Member of the military" includes those persons engaged
in (i) active duty, (ii) training or education under the
supervision of the United States preliminary to induction into
military service, or (iii) a period of active duty with the
State of Illinois under Title 10 or Title 32 of the United
States Code pursuant to order of the President or the Governor
of the State of Illinois.
"Outstanding balance" means the total amount owed by the
consumer on a loan to a lender, including all principal,
finance charges, fees, and charges of every kind.
"Payday loan" or "loan" means a loan with a finance charge
exceeding an annual percentage rate of 36% and with a term that
does not exceed 120 days, including any transaction conducted
via any medium whatsoever, including, but not limited to,
paper, facsimile, Internet, or telephone, in which:
(1) A lender accepts one or more checks dated on the
date written and agrees to hold them for a period of days
before deposit or presentment, or accepts one or more
checks dated subsequent to the date written and agrees to
hold them for deposit; or
(2) A lender accepts one or more authorizations to
debit a consumer's bank account; or
(3) A lender accepts an interest in a consumer's wages,

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including, but not limited to, a wage assignment.
The term "payday loan" includes "installment payday loan",
unless otherwise specified in this Act.
"Principal amount" means the amount received by the
consumer from the lender due and owing on a loan, excluding any
finance charges, interest, fees, or other loan-related
charges.
"Rollover" means to refinance, renew, amend, or extend a
loan beyond its original term.
(Source: P.A. 96-936, eff. 3-21-11.)
(815 ILCS 122/2-5)
Sec. 2-5. Loan terms.
(a) Without affecting the right of a consumer to prepay at
any time without cost or penalty, no payday loan may have a
minimum term of less than 13 days.
(b) Except for an installment payday loan as defined in
this Section, no payday loan may be made to a consumer if the
loan would result in the consumer being indebted to one or more
payday lenders for a period in excess of 45 consecutive days.
Except as provided under subsection (c) of this Section and
Section 2-40, if a consumer has or has had loans outstanding
for a period in excess of 45 consecutive days, no payday lender
may offer or make a loan to the consumer for at least 7
calendar days after the date on which the outstanding balance
of all payday loans made during the 45 consecutive day period

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is paid in full. For purposes of this subsection, the term
"consecutive days" means a series of continuous calendar days
in which the consumer has an outstanding balance on one or more
payday loans; however, if a payday loan is made to a consumer
within 6 days or less after the outstanding balance of all
loans is paid in full, those days are counted as "consecutive
days" for purposes of this subsection.
(c) Notwithstanding anything in this Act to the contrary, a
payday loan shall also include any installment loan otherwise
meeting the definition of payday loan contained in Section
1-10, but that has a term agreed by the parties of not less
than 112 days and not exceeding 180 days; hereinafter an
"installment payday loan". The following provisions shall
apply:
(i) Any installment payday loan must be fully
amortizing, with a finance charge not exceeding an annual
percentage rate of 36% calculated on the principal balances
scheduled to be outstanding and be repayable in
substantially equal and consecutive installments,
according to a payment schedule agreed by the parties with
not less than 13 days and not more than one month between
payments; except that the first installment period may be
longer than the remaining installment periods by not more
than 15 days, and the first installment payment may be
larger than the remaining installment payments by the
amount of finance charges applicable to the extra days. In

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calculating finance charges under this subsection, when
the first installment period is longer than the remaining
installment periods, the amount of the finance charges
applicable to the extra days shall not be greater than
$15.50 per $100 of the original principal balance divided
by the number of days in a regularly scheduled installment
period and multiplied by the number of extra days
determined by subtracting the number of days in a regularly
scheduled installment period from the number of days in the
first installment period.
(ii) An installment payday loan may be refinanced by a
new installment payday loan one time during the term of the
initial loan; provided that the total duration of
indebtedness on the initial installment payday loan
combined with the total term of indebtedness of the new
loan refinancing that initial loan, shall not exceed 180
days. For purposes of this Act, a refinancing occurs when
an existing installment payday loan is paid from the
proceeds of a new installment payday loan.
(iii) In the event an installment payday loan is paid
in full prior to the date on which the last scheduled
installment payment before maturity is due, other than
through a refinancing, no licensee may offer or make a
payday loan to the consumer for at least 2 calendar days
thereafter.
(iv) No installment payday loan may be made to a

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consumer if the loan would result in the consumer being
indebted to one or more payday lenders for a period in
excess of 180 consecutive days. The term "consecutive days"
does not include the date on which a consumer makes the
final installment payment.
(d) (Blank).
(e) No lender may make a payday loan to a consumer if the
total of all payday loan payments coming due within the first
calendar month of the loan, when combined with the payment
amount of all of the consumer's other outstanding payday loans
coming due within the same month, exceeds the lesser of:
(1) $1,000; or
(2) in the case of one or more payday loans, 25% of the
consumer's gross monthly income; or
(3) in the case of one or more installment payday
loans, 22.5% of the consumer's gross monthly income; or
(4) in the case of a payday loan and an installment
payday loan, 22.5% of the consumer's gross monthly income.
No loan shall be made to a consumer who has an outstanding
balance on 2 payday loans, except that, for a period of 12
months after March 21, 2011 (the effective date of Public Act
96-936), consumers with an existing CILA loan may be issued an
installment loan issued under this Act from the company from
which their CILA loan was issued.
(e-5) No Except as provided in subsection (c)(i), no lender
may impose a finance charge exceeding an annual percentage rate

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of 36% more than $15.50 per $100 loaned on any payday loan, or
more than $15.50 per $100 on the initial principal balance and
on the principal balances scheduled to be outstanding during
any installment period on any installment payday loan. Except
for installment payday loans and except as provided in Section
2-25, this charge is considered fully earned as of the date on
which the loan is made. For purposes of determining the finance
charge earned on an installment payday loan, the disclosed
annual percentage rate shall be applied to the principal
balances outstanding from time to time until the loan is paid
in full, or until the maturity date, whichever occurs first. No
finance charge may be imposed after the final scheduled
maturity date.
When any loan contract is paid in full, the licensee shall
refund any unearned finance charge. The unearned finance charge
that is refunded shall be calculated based on a method that is
at least as favorable to the consumer as the actuarial method,
as defined by the federal Truth in Lending Act. The sum of the
digits or rule of 78ths method of calculating prepaid interest
refunds is prohibited.
(f) A lender may not take or attempt to take an interest in
any of the consumer's personal property to secure a payday
loan.
(g) A consumer has the right to redeem a check or any other
item described in the definition of payday loan under Section
1-10 issued in connection with a payday loan from the lender

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holding the check or other item at any time before the payday
loan becomes payable by paying the full amount of the check or
other item.
(Source: P.A. 100-201, eff. 8-18-17.)
Section 99. Effective date. This Act takes effect upon
becoming law.