Illinois Payday Loan Reform Takes Hold
Illinois’ payday loan and consumer installment loan laws, the Consumer Installment Loan Act and the Payday Loan Reform Act (collectively referred to as CILA / PLRA), have taken effect. This is exciting news for a state that has “more payday loan stores than McDonald’s,” according to a 2004 statement from then-Lt. Governor Pat Quinn.
CILA / PLRA creates a number of rules protecting Illinois consumers. Among other things, the law caps interest on all consumer loans (99% for loans under $4,000 and 36% for loans above that amount); bans balloon payments, which often perpetuated a cycle of loan renewal; and limits the number of consecutive days over which a borrower can be in debt to a particular lender.
Rules to implement the law were approved by the Illinois Joint Committee on Administrative Rules on April 12. These rules will be administered by the Illinois Department of Financial and Professional Regulation.
CILA / PLRA faced a minor setback when the Illinois Lending Corporation sued the State of Illinois, seeking to prevent the law’s implementation. The Illinois Attorney General was able to reach a settlement with Illinois Lending Corporation, paving the way for the laws to take effect.
The law continues to evolve through the administrative rulemaking process, which fine-tunes statutes. Two bills proposed by the lending industry are under consideration by the Illinois State Senate. The Egan Coalition for Payday Loan Reform, of which Chicago Appleseed is a member, has been active in the rulemaking process so as to ensure the fairness of rules or amendments attached to CILA / PLRA.