Illinois Payday Loan Laws

Illinois Department of Financial and Professional Regulation Division of Financial Institutions set the following payday laws into place as a protection for their residents.

• Maximum Payday Loan Amount – $1,000 dollars or up to 25 percent of borrower’s monthly income
• Minimum Payday Loan Terms – 13 days
• Maximum Payday Loan Terms – 45 days
• Maximum Quantity of Outstanding Payday Loans – Two
• Maximum Amount of Payday Loan Extensions – None
• Maximum Payday Annual Percentage Rate (APR) – 403 percent
• Maximum Payday Financing Interest Fees – $15.50 for each $100 dollars
• Maximum Payday Annual Financing Interest Rates – $15.50
• Maximum Allotted NSF Check Fees – $25
• Maximum Allowed Criminal Actions – None

In addition to the prohibition of payday lenders being able to file criminal charges, lawmakers have made it possible for a borrower to back out of the agreement within 48 hours of the loan being signed. In addition, lenders are not allowed to bring a civil suit until after 28 days of non-payment on the loan. In addition, the limit of only two allowable payday loans at a time keeps the consumer somewhat safe from loan splitting, at least from legitimate payday lenders.

Payday loan splitting is when lenders approve several small loans instead of one larger one. This allows the payday loan company to collect double, triple, or more times the interest charges and fees from the same customer. However, because Illinois has made the maximum number of loans per person two, they have found loopholes to get around this. For instance, they will issue two loans in check form instead of cash. Then, charge the borrower more fees and a percentage of the check amount to cash the check. Now, the payday lender has obtained even more money from the same individual.

Although the payday laws are relaxed in Illinois, some untrustworthy lending services that continually look for new and underhanded ways to bypass them. The most common is to operate out of state and/or on American-Indian reservation lands. This way they can do just about anything they want by running their business online, from loan amounts to APR in the upper three and four digits.

Another thing for payday loan customers to be aware of is the practice of disguising actually getting a payday loan. For example, some lending companies will offer debit cards and/or will offer to cash a personal check, but will hold it until the customer’s next payday. This “convenient” service usually comes with high fees and NSF penalties.

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