Illinois General Assembly - Full Text of SB3410
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Full Text of SB3410  98th General Assembly




State of Illinois
2013 and 2014


Introduced 2/14/2014, by Sen. Andy Manar


815 ILCS 122/2-5
815 ILCS 122/3-5

    Amends the Payday Loan Reform Act. Authorizes a municipality to limit the number of licensees located in the municipality beginning January 1, 2015. Provides that the limit established by a municipality may be no less than 5. Provides for the Department of Financial and Professional Regulation to randomly nonrenew licenses if the renewed license would result in a number of licenses in excess of the municipal limit. Reduces maximum permissible finance charges.

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SB3410LRB098 19960 JLS 55513 b

1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Payday Loan Reform Act is amended by
5changing Sections 2-5 and 3-5 as follows:
6    (815 ILCS 122/2-5)
7    Sec. 2-5. Loan terms.
8    (a) Without affecting the right of a consumer to prepay at
9any time without cost or penalty, no payday loan may have a
10minimum term of less than 13 days.
11    (b) Except for an installment payday loan as defined in
12this Section, no payday loan may be made to a consumer if the
13loan would result in the consumer being indebted to one or more
14payday lenders for a period in excess of 45 consecutive days.
15Except as provided under subsection (c) of this Section and
16Section 2-40, if a consumer has or has had loans outstanding
17for a period in excess of 45 consecutive days, no payday lender
18may offer or make a loan to the consumer for at least 7
19calendar days after the date on which the outstanding balance
20of all payday loans made during the 45 consecutive day period
21is paid in full. For purposes of this subsection, the term
22"consecutive days" means a series of continuous calendar days
23in which the consumer has an outstanding balance on one or more



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1payday loans; however, if a payday loan is made to a consumer
2within 6 days or less after the outstanding balance of all
3loans is paid in full, those days are counted as "consecutive
4days" for purposes of this subsection.
5    (c) Notwithstanding anything in this Act to the contrary, a
6payday loan shall also include any installment loan otherwise
7meeting the definition of payday loan contained in Section
81-10, but that has a term agreed by the parties of not less
9than 112 days and not exceeding 180 days; hereinafter an
10"installment payday loan". The following provisions shall
12        (i) Any installment payday loan must be fully
13    amortizing, with a finance charge calculated on the
14    principal balances scheduled to be outstanding and be
15    repayable in substantially equal and consecutive
16    installments, according to a payment schedule agreed by the
17    parties with not less than 13 days and not more than one
18    month between payments; except that the first installment
19    period may be longer than the remaining installment periods
20    by not more than 15 days, and the first installment payment
21    may be larger than the remaining installment payments by
22    the amount of finance charges applicable to the extra days.
23    In calculating finance charges under this subsection, when
24    the first installment period is longer than the remaining
25    installment periods, the amount of the finance charges
26    applicable to the extra days shall not be greater than



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1    $7.75 $15.50 per $100 of the original principal balance
2    divided by the number of days in a regularly scheduled
3    installment period and multiplied by the number of extra
4    days determined by subtracting the number of days in a
5    regularly scheduled installment period from the number of
6    days in the first installment period.
7        (ii) An installment payday loan may be refinanced by a
8    new installment payday loan one time during the term of the
9    initial loan; provided that the total duration of
10    indebtedness on the initial installment payday loan
11    combined with the total term of indebtedness of the new
12    loan refinancing that initial loan, shall not exceed 180
13    days. For purposes of this Act, a refinancing occurs when
14    an existing installment payday loan is paid from the
15    proceeds of a new installment payday loan.
16        (iii) In the event an installment payday loan is paid
17    in full prior to the date on which the last scheduled
18    installment payment before maturity is due, other than
19    through a refinancing, no licensee may offer or make a
20    payday loan to the consumer for at least 2 calendar days
21    thereafter.
22        (iv) No installment payday loan may be made to a
23    consumer if the loan would result in the consumer being
24    indebted to one or more payday lenders for a period in
25    excess of 180 consecutive days. The term "consecutive days"
26    does not include the date on which a consumer makes the



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1    final installment payment.
2    (d) (Blank).
3    (e) No lender may make a payday loan to a consumer if the
4total of all payday loan payments coming due within the first
5calendar month of the loan, when combined with the payment
6amount of all of the consumer's other outstanding payday loans
7coming due within the same month, exceeds the lesser of:
8        (1) $1,000; or
9        (2) in the case of one or more payday loans, 25% of the
10    consumer's gross monthly income; or
11        (3) in the case of one or more installment payday
12    loans, 22.5% of the consumer's gross monthly income; or
13        (4) in the case of a payday loan and an installment
14    payday loan, 22.5% of the consumer's gross monthly income.
15    No loan shall be made to a consumer who has an outstanding
16balance on 2 payday loans, except that, for a period of 12
17months after the effective date of this amendatory Act of the
1896th General Assembly, consumers with an existing CILA loan may
19be issued an installment loan issued under this Act from the
20company from which their CILA loan was issued.
21    (e-5) Except as provided in subsection (c)(i), no lender
22may charge more than $7.75 $15.50 per $100 loaned on any payday
23loan, or more than $7.75 $15.50 per $100 on the initial
24principal balance and on the principal balances scheduled to be
25outstanding during any installment period on any installment
26payday loan. Except for installment payday loans and except as



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1provided in Section 2-25, this charge is considered fully
2earned as of the date on which the loan is made. For purposes
3of determining the finance charge earned on an installment
4payday loan, the disclosed annual percentage rate shall be
5applied to the principal balances outstanding from time to time
6until the loan is paid in full, or until the maturity date,
7which ever occurs first. No finance charge may be imposed after
8the final scheduled maturity date.
9    When any loan contract is paid in full, the licensee shall
10refund any unearned finance charge. The unearned finance charge
11that is refunded shall be calculated based on a method that is
12at least as favorable to the consumer as the actuarial method,
13as defined by the federal Truth in Lending Act. The sum of the
14digits or rule of 78ths method of calculating prepaid interest
15refunds is prohibited.
16    (f) A lender may not take or attempt to take an interest in
17any of the consumer's personal property to secure a payday
19    (g) A consumer has the right to redeem a check or any other
20item described in the definition of payday loan under Section
211-10 issued in connection with a payday loan from the lender
22holding the check or other item at any time before the payday
23loan becomes payable by paying the full amount of the check or
24other item.
25(Source: P.A. 96-936, eff. 3-21-11; 97-421, eff. 1-1-12.)



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1    (815 ILCS 122/3-5)
2    Sec. 3-5. Licensure.
3    (a) A license to make a payday loan shall state the
4address, including city and state, at which the business is to
5be conducted and shall state fully the name of the licensee.
6The license shall be conspicuously posted in the place of
7business of the licensee and shall not be transferable or
9    (b) An application for a license shall be in writing and in
10a form prescribed by the Secretary. The Secretary may not issue
11a payday loan license unless and until the following findings
12are made:
13        (1) that the financial responsibility, experience,
14    character, and general fitness of the applicant are such as
15    to command the confidence of the public and to warrant the
16    belief that the business will be operated lawfully and
17    fairly and within the provisions and purposes of this Act;
18    and
19        (2) that the applicant has submitted such other
20    information as the Secretary may deem necessary; and .
21        (3) that the issuance of the license would not result
22    in the number of licenses being issued for locations in a
23    municipality exceeding any limit upon the number of
24    licensed locations authorized by the municipality.
25    (c) A license shall be issued for no longer than one year,
26and no renewal of a license may be provided if a licensee has



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1substantially violated this Act and has not cured the violation
2to the satisfaction of the Department or if the renewal of the
3license would result in a number of licenses in a municipality
4exceeding the limit upon the number of licensed locations
5authorized by the municipality. If a municipality establishes a
6limit on the number of licensed locations that is less than the
7number of licenses sought to be renewed, the Department shall
8randomly determine which licenses to refuse to renew.
9    (d) A licensee shall appoint, in writing, the Secretary as
10attorney-in-fact upon whom all lawful process against the
11licensee may be served with the same legal force and validity
12as if served on the licensee. A copy of the written
13appointment, duly certified, shall be filed in the office of
14the Secretary, and a copy thereof certified by the Secretary
15shall be sufficient evidence to subject a licensee to
16jurisdiction in a court of law. This appointment shall remain
17in effect while any liability remains outstanding in this State
18against the licensee. When summons is served upon the Secretary
19as attorney-in-fact for a licensee, the Secretary shall
20immediately notify the licensee by registered mail, enclosing
21the summons and specifying the hour and day of service.
22    (e) A licensee must pay an annual fee of $1,000. In
23addition to the license fee, the reasonable expense of any
24examination or hearing by the Secretary under any provisions of
25this Act shall be borne by the licensee. If a licensee fails to
26renew its license by December 31, its license shall



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1automatically expire; however, the Secretary, in his or her
2discretion, may reinstate an expired license upon:
3        (1) payment of the annual fee within 30 days of the
4    date of expiration; and
5        (2) proof of good cause for failure to renew.
6    (f) Not more than one place of business shall be maintained
7under the same license, but the Secretary may issue more than
8one license to the same licensee upon compliance with all the
9provisions of this Act governing issuance of a single license.
10The location, except those locations already in existence as of
11June 1, 2005, may not be within one mile of a horse race track
12subject to the Illinois Horse Racing Act of 1975, within one
13mile of a facility at which gambling is conducted under the
14Riverboat Gambling Act, within one mile of the location at
15which a riverboat subject to the Riverboat Gambling Act docks,
16or within one mile of any State of Illinois or United States
17military base or naval installation.
18    (g) No licensee shall conduct the business of making loans
19under this Act within any office, suite, room, or place of
20business in which (1) any loans are offered or made under the
21Consumer Installment Loan Act other than title secured loans as
22defined in subsection (a) of Section 15 of the Consumer
23Installment Loan Act and governed by Title 38, Section 110.330
24of the Illinois Administrative Code or (2) any other business
25is solicited or engaged in unless the other business is
26licensed by the Department or, in the opinion of the Secretary,



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1the other business would not be contrary to the best interests
2of consumers and is authorized by the Secretary in writing.
3    (g-5) Notwithstanding subsection (g) of this Section, a
4licensee may obtain a license under the Consumer Installment
5Loan Act (CILA) for the exclusive purpose and use of making
6title secured loans, as defined in subsection (a) of Section 15
7of CILA and governed by Title 38, Section 110.300 of the
8Illinois Administrative Code. A licensee may continue to
9service Consumer Installment Loan Act loans that were
10outstanding as of the effective date of this amendatory Act of
11the 96th General Assembly.
12    (h) The Secretary shall maintain a list of licensees that
13shall be available to interested consumers and lenders and the
14public. The Secretary shall maintain a toll-free number whereby
15consumers may obtain information about licensees. The
16Secretary shall also establish a complaint process under which
17an aggrieved consumer may file a complaint against a licensee
18or non-licensee who violates any provision of this Act.
19    (i) A municipality may by ordinance limit the number of
20licensees under this Act that may be located in the
21municipality on and after January 1, 2015. The limit
22established by the municipality may not be fewer than 5
24(Source: P.A. 96-936, eff. 3-21-11.)