Illinois Payday Loans: Law, Stats and History

Illinois Payday Loan Regulations
Legal Status
Legal
Interest Rate (APR)
36%
Maximum Loan Amount
$1,000 (or 25% of the gross monthly income)
Minimum Loan Term
13 days
Maximum Loan Term
120 days
Number of Rollovers
0 (for installment payday loans is just one time)
Number of Outstanding Loans
2
Cooling-off Period
7 days after 45 consecutive loan days
Installment
Yes
Finance Charges
$1 verification fee
A fee does not exceed $25 for insufficient funds
Statute of Limitations
10 years
Database Loan Tracking
Yes

In the state of Illinois, payday lending is considered legal.

Illinois has a limit on the amount of a classical payday loan: $1,000 or 25% of the gross monthly income, whichever is less. Loans can be taken from 13 days up to 120 days. Finance charges should not exceed 36%. Criminal actions are prohibited.

Until March 23, 2021, the state of Illinois offered 3 payday loan products at the moment: a small consumer loan with APR not more than 99%, payday installment loans that last up to 6 months and have an APR up to 400%, and payday loans (according to the website of Illinois Attorney General).

New loan SB 1792 was signed by Governor on March 23, 2021, it limited an ARP to 36%.

Illinois Payday Lending Statutes

Payday lending is considered legal in the state of Illinois (815 ILCS 122/1-1 et seq.).

The Illinois Department of Financial and Professional Regulations (IDFPR) keeps a database of all Illinois payday loans. It is required that all lenders checked the database before issuing a new loan to a consumer and also entered the information regarding the new loan types into the database. The database was created with the idea to eliminate abusive practices of payday lending and bring more order into the industry.

Loan Amount in Illinois

Lenders may not provide a payday loan to consumers if the combined total of all payday loan payments due to be repaid in the first calendar month exceeds $1000 or 25% of the borrower’s gross monthly income in the case of multiple loans. This is also true if, when combined with the payment amount of all other outstanding loans coming due, the amount exceeds $1000 or 25% of a borrower’s gross monthly income. It is also not permissible to obtain more than two loans at any one time. (815 ILCS 122/1-1 et seq.).

Rates, Fees and Other Charges in Illinois

A licensed lender may not draft a contract for, or move to receive a charge that is greater than a 36 percent annual percentage rate on open balances. Under §,2-15, a $1 fee is required for verification. (815 ILCS 122/1-1 et seq.).

How Much Would a $100 Payday Loan Cost in Illinois?

With a 13 days term:

36% / 365 days = 0.0986 * 13 days = $1.28
ARP: 36%
Loan cost: $1.28
To return: $101.28

Loan Term

  • In Illinois, a person can take a payday loan for a term from 13 up to 120 days.
  • Rollovers are prohibited especially if they are meant to extend the repayment period of another payday loan.
  • A cooling-off period means that you have to wait 7 days after 45 days of having a loan (except for installment payday loans.) Otherwise, you will not get the next loan.
  • An installment payday loan should be offered for a period of not less than 112 days and not exceeding 180 days.

Database

Lenders must input every loan record into the special database (since 2006) – Illinois Consumer Reporting Service Database.
Every new borrower will be checked through this database.
If you were denied a payday loan due to information in the database, you can contact directly the company that operates it.

Consumer Information

Attention
From July 2020, lenders are not required to check a borrower’s ability to repay a loan.
Be careful, evaluate your financial situation, don’t get into a debt trap.
The rule was changed by the CFPB.

  • Criminal charges are prohibited in the state of Illinois.
  • In case of NSF to pay a check, a lender may charge a fee not to exceed $25.
  • Lenders are not permitted to take any interest in any personal assets of the borrower to secure a payday loan. (815 ILCS 122/1-1 et seq.).

The Illinois Department of Financial and Professional Regulations (IDFPR) regulates the payday lending industry in the state of Illinois.

Regulator: Complaints & Information

Illinois Division of Financial Institutions

Chicago Office: 100 W Randolph St, 9th Floor, Chicago, IL 60601
Springfield Office: 320 W Washington, 3rd Floor, Springfield, IL 62786
Tel: 888-473-4858
Url: https://www.idfpr.com/Contact/DFIContact.asp
File a Complaint: https://www.idfpr.com/admin/banks/DoBcomplaints.asp

Number of Illinois Consumers Complaints by Topics

According to CFPB Consumer Complaint Database

  • Fraud and threat ( 182 )
  • Not exiting debt ( 145 )
  • Charges from account ( 139 )
  • Loan to return ( 47 )
  • Lender is not available ( 46 )
  • Credit rating ( 40 )
  • Not requested loan ( 26 )
  • Loan not received ( 23 )

The Quantity of Top Illinois Stores by Cities


Statistics

YearNo. of Unique ClientsNo. of LoansValue of Loans, million
2012246,741551,347$303.4
2013250,606551,670$313.4
2014260,366573,269$331.2
2015263,660584,367$335.4
2016260,705595,943$329.5
2017247,556555,900$320.1
2018238,110511,061$310.4
2019238,058502,822$317.8
Stats provided by Illinois Department of Financial & Professional Regulation

The History of Payday Loans in Illinois

  • 2000 – The state of Illinois, in attempts to further regulate payday lenders, passed laws to regulate any loan carrying a term less than 30 days. Payday lenders have opted to extend the length of some loans to 31 days in a response to the laws.
  • 2005 – Before the Payday Loan Reform Act (2005), payday lenders were largely unregulated in Illinois. The PLRA prohibited unlimited rollovers and set that payday loans must be based on a borrower’s ability to pay. The law regulated loans with terms less than 120 days. However, payday lenders began offering loans for longer terms to avoid the
  • 2005 – now – Triple-digit APR installment payday loans became common.
  • 2006 – The Military Lending Act effectively capped payday loans offered to the military at 36% APR. No lender in Illinois is now allowed to offer loans to the military in excess of 36% APR.
  • March 21, 2011 HB 537 It amended the Payday Loan Reform Act (PLRA) to create Installment Payday Loans and the Consumer Installment Loan Act (CILA) to create Small Consumer Loans.
  • The Illinois Payday Loan Reform took hold in 2011 and the situation stays the same since then.
  • June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect.
  • March 23, 2021SB 1792 was signed by Governor JB Pritzker, it caps rates on payday loans (and all consumer loans under $40,000) at 36%.

[Updated As of August 2021]

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