Public Act 93-0264

HB2543 Enrolled                      LRB093 03657 LRD 03686 b

    AN ACT in relation to installment loans.

    Be it enacted by the People of  the  State  of  Illinois,
represented in the General Assembly:

    Section  5.  The Consumer Installment Loan Act is amended
by changing Sections 15 and 17 as follows:

    (205 ILCS 670/15) (from Ch. 17, par. 5415)
    Sec. 15. Charges permitted.
    (a)  Every licensee  may  lend  a  principal  amount  not
exceeding  $40,000  $25,000  and may charge, contract for and
receive thereon interest at  the  rate  agreed  upon  by  the
licensee  and the borrower, subject to the provisions of this
Act.
    (b)  For purpose of this  Section,  the  following  terms
shall have the meanings ascribed herein.
    "Applicable  interest"  for  a  precomputed loan contract
means the amount of interest  attributable  to  each  monthly
installment  period.   It  is computed as if each installment
period were one month and any interest charged for  extending
the  first  installment  period  beyond one month is ignored.
The applicable interest for any monthly installment period is
that portion of the precomputed interest that bears the  same
ratio  to  the  total  precomputed  interest  as the balances
scheduled to be outstanding during that month bear to the sum
of all scheduled monthly outstanding balances in the original
contract.
    "Interest-bearing loan" means a loan in which the debt is
expressed as a principal  amount  plus  interest  charged  on
actual  unpaid  principal  balances  for  the  time  actually
outstanding.
    "Precomputed  loan"  means  a  loan  in which the debt is
expressed as the sum of the original  principal  amount  plus
interest   computed  actuarially  in  advance,  assuming  all
payments will be made when scheduled.
    (c)  Loans may be interest-bearing or precomputed.
    (d)  To  compute  time  for  either  interest-bearing  or
precomputed loans for the calculation of interest  and  other
purposes,  a  month shall be a calendar month and a day shall
be considered 1/30th of a month when calculation is made  for
a fraction of a month.  A month shall be 1/12th of a year.  A
calendar  month is that period from a given date in one month
to the same numbered date in  the  following  month,  and  if
there  is  no  same  numbered  date,  to  the last day of the
following month.  When a period of time includes a month  and
a  fraction  of  a  month,  the  fraction  of  the  month  is
considered  to  follow  the whole month.  In the alternative,
for interest-bearing loans, the licensee may charge  interest
at the rate of 1/365th of the agreed annual rate for each day
actually elapsed.
    (e)  With respect to interest-bearing loans:
         (1)  Interest  shall be computed on unpaid principal
    balances outstanding from time  to  time,  for  the  time
    outstanding,  until  fully  paid.   Each payment shall be
    applied  first  to  the  accumulated  interest  and   the
    remainder  of the payment applied to the unpaid principal
    balance; provided however, that  if  the  amount  of  the
    payment  is insufficient to pay the accumulated interest,
    the unpaid interest continues to accumulate  to  be  paid
    from the proceeds of subsequent payments and is not added
    to the principal balance.
         (2)  Interest  shall  not  be  payable in advance or
    compounded.  However, if part or all of the consideration
    for a new loan contract is the unpaid  principal  balance
    of  a prior loan, then the principal amount payable under
    the new loan contract may  include  any  unpaid  interest
    which  has  accrued.    The unpaid principal balance of a
    precomputed loan is  the  balance  due  after  refund  or
    credit of unearned interest as provided in paragraph (f),
    clause  (3).  The resulting loan contract shall be deemed
    a new and separate loan transaction for all purposes.
         (3)  Loans may be  payable  as  agreed  between  the
    parties,  including  payment  at  irregular  times  or in
    unequal amounts and rates that may  vary  with  an  index
    that  is  independently verifiable and beyond the control
    of the licensee.
         (4)  The lender or creditor  may,  if  the  contract
    provides,  collect  a delinquency or collection charge on
    each installment in default for a period of not less than
    10 days in an amount not exceeding 5% of the  installment
    on installments in excess of $200, or $10 on installments
    of  $200 or less, but only one delinquency and collection
    charge may be collected on any installment regardless  of
    the period during which it remains in default.
    (f)  With respect to precomputed loans:
         (1)  Loans shall be repayable in substantially equal
    and  consecutive  monthly  installments  of principal and
    interest combined,  except  that  the  first  installment
    period  may  be longer than one month by not more than 15
    days, and the first installment  payment  amount  may  be
    larger  than  the  remaining  payments  by  the amount of
    interest charged for the extra days; and provided further
    that monthly installment payment dates may be omitted  to
    accommodate borrowers with seasonal income.
         (2)  Payments  may  be applied to the combined total
    of principal and precomputed interest until the  loan  is
    fully  paid.   Payments  shall be applied in the order in
    which they become due, except that any insurance proceeds
    received as a result of any claim made on any  insurance,
    unless  sufficient to prepay the contract in full, may be
    applied to  the  unpaid  installments  of  the  total  of
    payments in inverse order.
         (3)  When any loan contract is paid in full by cash,
    renewal  or refinancing, or a new loan, one month or more
    before the final installment due date, a  licensee  shall
    refund  or  credit  the  obligor  with  the  total of the
    applicable interest for all fully  unexpired  installment
    periods,  as  originally  scheduled or as deferred, which
    follow the day of prepayment; provided, if the prepayment
    occurs prior to  the  first  installment  due  date,  the
    licensee may retain 1/30 of the applicable interest for a
    first  installment  period of one month for each day from
    the date of the loan to the date of prepayment, and shall
    refund or credit the obligor  with  the  balance  of  the
    total  interest  contracted  for.  If the maturity of the
    loan is  accelerated  for  any  reason  and  judgment  is
    entered,  the licensee shall credit the borrower with the
    same refund as if prepayment in full had been made on the
    date the judgement is entered.
         (4)  The lender or creditor  may,  if  the  contract
    provides,  collect  a delinquency or collection charge on
    each installment in default for a period of not less than
    10 days in an amount not exceeding 5% of the  installment
    on installments in excess of $200, or $10 on installments
    of  $200  or less, but only one delinquency or collection
    charge may be collected on any installment regardless  of
    the period during which it remains in default.
         (5)  If  the parties agree in writing, either in the
    loan  contract  or  in  a  subsequent  agreement,  to   a
    deferment  of  wholly unpaid installments, a licensee may
    grant a deferment and may collect a deferment  charge  as
    provided  in  this  Section.   A  deferment postpones the
    scheduled due date of the earliest unpaid installment and
    all subsequent installments as originally  scheduled,  or
    as  previously  deferred,  for  a  period  equal  to  the
    deferment  period.   The  deferment period is that period
    during which no installment is scheduled to  be  paid  by
    reason  of the deferment.  The deferment charge for a one
    month period may not exceed the applicable  interest  for
    the installment period immediately following the due date
    of  the  last undeferred payment.  A proportionate charge
    may be made for deferment for periods  of  more  or  less
    than  one  month.   A deferment charge is earned pro rata
    during the deferment period and is fully  earned  on  the
    last  day  of  the  deferment  period.   Should a loan be
    prepaid in full during a deferment period,  the  licensee
    shall  credit  to  the  obligor  a refund of the unearned
    deferment charge in  addition  to  any  other  refund  or
    credit made for prepayment of the loan in full.
         (6)  If  two or more installments are delinquent one
    full month or more on any due date, and if  the  contract
    so  provides,  the licensee may reduce the unpaid balance
    by  the  refund  credit  which  would  be  required   for
    prepayment  in  full  on  the due date of the most recent
    maturing installment in default. Thereafter, and in  lieu
    of  any  other  default  or deferment charges, the agreed
    rate of interest may be charged  on  the  unpaid  balance
    until fully paid.
         (7)  Fifteen  days  after  the  final installment as
    originally scheduled or deferred, the licensee,  for  any
    loan  contract which has not previously been converted to
    interest-bearing under paragraph  (f),  clause  (6),  may
    compute  and  charge  interest  on  any balance remaining
    unpaid, including unpaid default or deferment charges, at
    the agreed rate of interest until  fully  paid.   At  the
    time  of  payment of said final installment, the licensee
    shall give notice to  the  obligor  stating  any  amounts
    unpaid.
(Source: P.A. 90-437, eff. 1-1-98.)
    (205 ILCS 670/17) (from Ch. 17, par. 5423)
    Sec. 17. Maximum term and amount. The loan contract shall
provide for repayment of the principal and charges within 181
months  from  the  date  of  the  loan  contract  or the last
advance, if any, required by the loan contract.  No  licensee
shall  permit an obligor to owe such licensee or an affiliate
(including a corporation owned or managed by the licensee) or
agent of such licensee an aggregate principal amount of  more
than  $40,000  $25,000  at  any  time  for  loans  transacted
pursuant to this Act.
(Source: P.A. 90-437, eff. 1-1-98.)