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Protecting the Rights of Consumers For Over 25 Years


Please contact us if you are in Illinois and have obtained a loan at more than 36% interest.  We have filed numerous lawsuits complaining of such loans.

On Tuesday, March 23, 2021, lllinois Governor J.B. Pritzker signed into law the Illinois Predatory Loan Prevention Act (SB 1792, 815 ILCS 123/15-1-1 et seq.) that caps rates at 36% on consumer loans and retail installment contracts, including payday and car title loans.

Unfortunately, it is only prospective in effect; higher rate loans that already exist are not affected by the statute. However, there are other grounds for attacking high interest loans issued before March 23, 2021.

Prior to the legislation, the average annual percentage rate (APR) for a payday loan in Illinois was 297%, while auto title loans averaged APRs of about 179%, according to the Woodstock Institute, an organization that was part of a coalition formed in support of the legislation.

“The Predatory Loan Prevention Act will substantially restrict any entity from making usurious loans to consumers in Illinois,” Pritzker said Tuesday. “This reform offers substantial protections to the low-income communities so often targeted by these predatory exchanges.”

The statute applies to all loans made under the Consumer Installment Loan Act, all retail installment contracts made pursuant to the Motor Vehicle Retail Installment Sales Act and Retail Installment Sales Act, the making and purchase of loans and contracts by licensees under the Sales Finance Agency Act (the statute that regulates entities that purchase retail installment contracts), and the making of loans under the Payday Loan Reform Act. The previously permitted $25 document preparation fee for consumer installment loans is abolished. All loans made under the Consumer Installment Loan Act, the Payday Loan Reform Act, and the Sales Finance Agency Act must be reported to the "Veritech" loan database operated by the Illinois Department of Financial and Professional Regulation.

Loans made by banks and credit unions are exempt from the statute. However, the statute provides a very expansive evasion standard that (1) prohibits the use of any device, subterfuge, or pretense to evade the requirements of the statute and (2) eliminates any exemption from the statute for an entity that has a loan in excess of the interest rate limitations and that (a) directly or indirectly holds the predominant economic interest in the loan; (b) markets, brokers, arranges, or facilitates the loan and holds the right, requirement, or first right of refusal to purchase loans, receivables, or interests in the loans; or where (c) the totality of the circumstances indicate that the person or entity is the real lender and the transaction is structured to evade the requirements of this Act. This allows the statute to reach "rent a bank" or "rent a tribe" schemes where a bank or credit union or Indian tribal organization is the nominal lender but the loan is in fact arranged by or promptly transferred to a non-exempt entity pursuant to an arrangement with the bank or credit union or tribal organization.

The 36% is calculated in a more inclusive manner than under Truth in Lending. For purposes of the Predatory Loan Prevention Act, the APR must be calculated pursuant to the rules for the Military Lending Act Annual Percentage Rate in 32 C.F.R. 232.4. This means that certain fees must be included in the finance charge which are not included in the finance charge under Truth in Lending and other laws which incorporate the Truth in Lending APR. Common examples of fees that must be included in the finance charge under the Predatory Loan Prevention Act are credit insurance premiums, participation fees, and application fees.

Penalties for violating the statute are substantial. The transaction is void and all principal and interest are forfeited. In addition, a violation of the law constitutes a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, which would allow a borrower to recover actual damages, punitive damages and reasonable attorney fees. (815 ILCS 123/15-10-5)

It has come to our attention that lenders are continuing to make loans in excess of 36% over the Internet, often claiming to be authorized to do so by Native American tribes. If you live in Illinois and have obtained a loan in excess of 36% since March 23, 2021, please contact us. Many loans made by such lenders prior to March 23, 2021 are also actionable, as the lenders were generally not licensed in Illinois.

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