Illinois Loan Rules: Walkthrough for Beginners

Payday Loan Process in Illinois

Last Revised 04/04/2020
The entire concept of payday loans, as well as the process itself, has undergone a considerable re-evaluation over the past 10-15 years. Back in the day, lenders who operated in an unregulated way could easily take advantage of borrowers, putting them into a sort of a vicious circle of indebtedness and creating more of a turmoil than really helping out. This state of things has done full 180 since that time – to be more precise, since the introduction of the first legislation act regulating the nature of loan issuing. Below you will find information on how the business of microloans is regulated in the state of Illinois.

The borrowers of Illinois are presented with two opportunities for loan application: at the brick-and-mortar office of a lending company or online, from basically whichever location. When physical presence of the borrower is not required, so many time-consuming things are taken out of the equation: there is no need to take a break from your work day, no need to drive to the office of the lender, no need to collect documents required to be presented at the moment of application, no need to wait around until the decision is made, and no need to leave a deposit. Money is received directly into the borrower’s account during the next workday. Save for a limited number of scenarios where applying for a loan in person is dictated by circumstantial convenience, online loan application is a winner all around!

Illinois Payday Loan Laws and Regulations

The issuing of payday loans in Illinois is regulated by the statutory citation 815 ILCS 122/1-1 et seq. The basic requirement as to the amount of a single payday loan issued in Illinois is that the sum lent must not exceed $1,000. To this should be added though, that if 25% of borrower’s income is less than $1,000, a loan cannot exceed the sum of the gross monthly income.

With an exception of installment payday loans, a single payday loan should not exceed 120 and should not be less than 13 days. Installment loans are issued for a period of time between 112 and 180 days.

Minimal term: 13 days
Maximal term: 180 days
Maximal fee per $100,00: $15,00 on payday loans / $15.50 on installment loans
Minimal period between installment loan payments: 13 days
Maximal period between installment loan payments: 31 days
Maximal APR: for a 14-day $100 loan is 403%
Rollover: Rollover of a payday loan is prohibited
Repayment plan: Available, after 35 days of debt. The repayment plan will give you at least 55 days to repay your loan in installments with no additional finance charges, interest, fees, or other charges of any kind (815 ILCS 122/2-20).

Disclosed annual percentage rate is required to be applied to the amount of the payoff every once in a while for installment loans until the underlying obligation is fully satisfied. This rule is implemented for the purposes of monitoring the amount of money earned in financial charges applicable to the payday loan issued by the company.

Be sure that you have money in your checking account on the due date of the loan so that your check does not bounce when it is deposited.

Regulator: Illinois Department of Financial and Professional Regulation (IDFPR)

File a Complaint Online:
Illinois Guide to Payday Loan: PDF

Illinois Consumer Protection

By the legislature of the state of Illinois it is prohibited to make payday loans to borrowers with other payday loan payoffs due within the first calendar month, if the sum of the outstanding principal balance and financial charges exceeds $1,000, alternatively, 25% of the borrower’s gross monthly income (in the event of the consumer having one or more unpaid loan), or 22.5% of the borrower’s gross monthly income (in the event of an unpaid installment payday loan or a current payday loan and an installment loan).

As IL borrower, according to 815 ILCS 122/2-25, you can cancel your future obligations on a payday loan without cost or finance charge if you cancel the loan by the end of the second business day immediately following the day your payday loan was executed.

Members of the military have additional protections including: a ban on wage garnishment, deferral of collection activity for personnel deployed to a combat area, and a prohibition on contacting a consumer’s commanding officer. More information about credit protections for service members here.

Installment payday loans in the state of Illinois must be scheduled to be repayable with equal intervals (13 to 31 days) between them and be fully amortized, to be paid off in equal installments with the exception of the first installment which can be extended by 15 days with the increase in payment resulting from financial charges for the extra days.

The state legislature lines out the rules regulating the issuing of debt instrument in a precise and unambiguous way which guarantees consumer safety and protects their best interests. Loan application is as safe online as it is offline, but the convenience and efficiency increase multifold when application is made through a trusted payday loan finder service online.