Illinois HB 537

On March 21st, Illinois will have a new payday loan law.  The law stems from HB 537 (House bill).  There is some confusion out there b/c there will be two products.  One is a single payment product.  This has a pricing of $15.50 / $100 and the borrower can only be in debt for 45 days before they have a mandatory 7-day cooling off period.  This product is not any good b/c it would put everyone out of business.  The two products have similar elements, mostly b/c they were written by the same legislature, also referred to as people that don’t understand the product or the customer.

The new product is a payday installment product.  This product was included in the 11th hour of HB 537.  Here are the cliff notes:

New – Installment Payday Loan

  • Capped at $15.50 per $100 loaned per payment
  • Minimum loan term 112 days
  • Maximum loan term 180 days
  • One refinancing during term of loan, but the second loan within 180 days must have a minimum term of 112 days (refinance before day 68)
  • No Rule of 78s on refunding interest on prepayment
  • Two loans allowed as long as the 180 day term and 22.5% of GMI is not exceeded
  • Loans must be fully amortized
  • Total amount of monthly payments cannot exceed 22.5% of the customer’s gross monthly income
  • 2 day cool-off for pre-payment only
  • Live database for loan approval (Veritec)
  • 12 month period in which lenders may offer the new PLRA loan to their customers with existing CILA loans (not new CILA loans)
  • Lenders with PLRA licenses may ONLY make auto title loans with their CILA licenses – no other CILA loans allowed
  • $1 charge to customer to cover cost of database check
  • No repayment plan for new PLRA loan

If you need systems help, contact Nick over at Intro XL.  They’re a leading loan software provider in Illinois and can help you or atleast answer your questions.

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