Lenders hold their breath in Illinois

Legislators have hacked a bill together in Illinois that will try and lock out smaller, local lenders. This bill can expire May 31st when the general session ends. Other possibilities is and extended session, if the budget does not get balanced. If the bill dies, everything starts over in November. It’s currently in the Executive Committee of the House.

Originally, SB1435 capped rates for loans greater than 120 days at 99% interest. My feeling was that many toes outside of the payday industry would be stepped on, which would slow down the bill. This bill has been beefed up since my original post titled, Illinois Trying to Cap Rates at 99%.

This bill is basically getting rid of smaller lenders b/c the big payday lenders can survive operating under the PLRA loan structure. The pricing for CILA (installment lenders) is there for the Houshold Financials and American Generals of the world that lend between 36-100%.

Here are the details (talk about knee-jerk):

  1. 99% APR cap on all loans of $1000 or less; 36-70% APR cap on loans between $1001 and $4000; 36% APR cap on loans over $4000
  2. 20% gross monthly income requirement
  3. Minimum loan term 180 Days
  4. No dual licensing – only CILA or only PLRA
  5. Database check on CILA loans
  6. Only one CILA loan per customer
  7. Ban on balloon loans in CILA – all must be fully amortized
  8. No postdated checks

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