Illinois has a 36% interest rate cap on certain loans | Weiner Brodsky Kider PC
Illinois recently launched the Loan Prevention Act, and his Department of Financial and Professional Regulation recently issued a list of frequently asked Questions (FAQs) on the law. The law came into force on March 23, 2021.
The law provides for an interest rate cap of 36 percent for qualifying loans taken out on or after March 23, 2021. The law defines credit as money or credit granted to a consumer in exchange for the consumer’s consent on certain terms including, but not limited to, financial charges, interest, or other terms. Loans include closed and open loans, hire purchase agreements in retail and hire purchase agreements in automotive retail. The law does not apply to commercial loans.
The law also changes the reporting requirements for title-backed loans. According to the change, any title-secured loan issued under the Illinois Consumer Installment Loan Act (CILA) must be reported to the Veritec state database. The change requires reporting of certain information and compliance with department regulations. Prior to the change, CILA did not require reporting of title-backed loans with an annual interest rate of less than 36 percent. Illinois has suspended regulatory or enforcement efforts to report violations until further notice while it works to promulgate rules to meet these new reporting requirements.
While the law did not change the reporting requirements for payday loans granted under the Illinois Payday Loan Reform Act, the law does away with installment payday loans.
The law does not include banks, credit unions, and insurance companies organized, chartered, or authorized under the laws of any state or the United States.