Illinois Payday Loans

An opinion handed down this week by the Illinois Supreme Court could have an impact on how the Bloomington City Council moves forward on a request to limit interest on payday loans according to  City attorney Todd Greenburg. This will affect a push to limit the interest rates charged on Illinois Payday Loans.

WJBC News report by Ryan Denham:

Bloomington City Attorney Todd Greenburg said Thursday that prior to the ruling, the chances were “very good” that the courts would rule that home-rule municipalities have the authority to regulate interest rates on payday loans and consumer installment loans. “I can’t categorically state that there is no possibility whatsoever that home-rule regulation would be upheld (after the ruling), but I think it’s definitely an uphill battle,” Greenburg said. Read full article here.

Read the full Illinois Supreme Court rulling PDF: Illinois Supreme Court StubHub ruling 

The Illinois People’s Action, a community church group that backed the proposed interest limits, “will take the be considering the new ruling as we continue our talks with the City Council,” said IPA member Jack Porter. “We will have to look at it very carefully. Whatever we do will have to take into account what the Supreme Court said,” said Porter. “The timing of the ruling could delay the process of bringing a measure to the council, but it could prove advantageous if it allows the new legal precedent to be addressed ahead of an ordinance. A move that could help the city avoid or overcome legal challenges,” said Porter about Illinois payday loans.

The only thing I can add is, if you don’t want to pay the crazy interest rates and fees by Illinois payday loans vendors - don’t borrow the money. Now what about these gas prices? Snow tires for the bicycle maybe….

Illinois Governor Pat Quinn signed a bill into law Monday putting a cap on the often high interest rates charged on short-term consumer loans. The law regulates the so-called “payday loan” business, which usually requires its loans to be paid back within two weeks, and which have historically charged consumers higher interest rates. The loans are often the only option available to some borrowers who need money in a hurry, and their interest rates can keep borrowers in a cycle of debt.

Bill HB 537 also places restrictions on “consumer installment loans,” which the law defines as lasting longer than six months. The Chicago Tribune explains some of the new regulations:

Under the new rules, interest rates would be capped at 99 percent for consumer installment loans of $4,000 and less and at 36 percent for loans that are $4,000 or more. Previously, there were no limits on how much loan companies could charge in interest, and some borrowers were smacked with rates as high as 700 to 1,000 percent, according to Quinn’s office. … Interest rates on payday loans also would be limited, with rates being capped at $15.50 for every $100 borrowed over a two-week period. Additionally, loan firms would have to verify that a borrower has the ability to repay a loan and would not be allowed to issue pay day loans if monthly payments would exceed 25 percent of a person’s gross monthly income. That limit drops to 22.5 percent for those taking out longer consumer installment loans.

Attorney General Lisa Madigan, who was among the leaders in advancing the legislation, praised its passage Monday. But she continued to warn consumers that payday loans still have much steeper interest rates than those offered by banks and even credit cards. The loans “will still be costly, and should only be used in emergencies and in the last resort,” Madigan said.