If you lend in Illinois, the new title loan rules go into effect on April 1st. Here are some relevant points with regards to the new laws.
Some of this is systems based while other parts is operational.
- The loan must be computed at simple interest and must be fully amortized.
- The maximum loan amount is $4000.
- Loans may be refinanced, but the principal must be reduce by 20% at each refinance.
- After a refinance, the principal amount of the new loan may not exceed the total outstanding amount of the loan being refinanced.
- Loans must be checked against a state database, with loan information – determined by the department – entered into the database. Not until Oct. 1st. 6)A title-secured loan may not exceed $4,000 in principal amount. However, no loan shall be made in such amount that the principal and interest payment for any one monthly payment on the loan exceeds 50% of the obligor’s gross monthly income, except to the extent that loan prepayment is allowed by Section 16(j) of the Act.
As far as your contract requirements, there are some disclosures that will need to be added to your loan agreements.
If you want to join a group to get and share information on the new law change, please go to: http://groups.google.com/group/illinois-lenders .
Please note that you must be a lender to join this group.
