Payday reform bill on verge of passing statehouse

This comes from Crain’s Chicago.

“Compromise legislation to overhaul two state laws—the Consumer Installment Loan Act and the Payday Loan Reform Act—cleared the state Senate last week on a 58-1 vote and is pending in the House. Representatives of both consumer groups and lenders, which have battled for three years to close what critics have called a loophole in the payday loan law, expect the House to send the bill to the governor’s desk when lawmakers return to Springfield later this month.

The compromise, negotiated by bill sponsor Sen. Kimberly Lightford, D-Maywood, would impose a cap of 99% on consumer installment loans under $4,000 and 36% for those above that threshold. Previously, interest rates under the consumer installment loans were unregulated, leading payday lenders subject to rate caps to offer slightly longer-term loans in order to fall under the less stringent law.

Lenders operating under the consumer installment law charge rates as high as 700%, consumer advocates say.

The Payday Loan Reform Act, meanwhile, would be amended to increase the allowed terms of the loans to six months from four. Remaining the same is the limit of charging no more than $15.50 per $100 loaned out every two weeks.”

There are many unknowns, at this point.   The good news is that a bill does not become a law until 9 months after the governor signs it.

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