Borrowing in Illinois: What State Law Allows

One ceiling for nearly every non-bank loan

The Predatory Loan Prevention Act (815 ILCS 123) applies to any person or business that offers or makes a loan to a consumer in Illinois, including companies that arrange loans, buy them or act as agents for someone else. Banks, savings institutions, credit unions and insurance companies chartered by a state or the federal government are exempt.

Covered lenders can't contract for or collect charges above a 36% APR. The APR is calculated with the military APR method from the federal Military Lending Act rule, which counts most fees and add-on products, not just interest. That closes the gap that let older payday and installment products advertise a modest rate and charge fees on top.

Lenders licensed under Illinois's other lending laws must fit under the same ceiling, and breaking the Act can also cost them their license under those laws. A product that depends on a triple-digit APR can no longer be offered legally.

What the cap means for payday and title loans

A 36% loan isn't automatically affordable. On a short loan, a 36% APR still means real dollars. See payday loan alternatives for options that may cost less, such as federal credit union loans, which are held to an 18% APR ceiling on most loans through September 10, 2027.

How the law treats workarounds

The Act forbids any device or pretense to evade the cap, such as a disguised sale-leaseback or loan money dressed up as a cash rebate. It also targets rent-a-bank programs. A company is treated as the lender, even if a bank's name is on the paperwork, when it holds the main economic interest in the loan, markets the loan and has the right to buy it, or otherwise is the true lender based on all the circumstances.

• A loan made in violation of the Act is null and void: no one may collect principal, fees, interest or charges on it.
• A violation is also a violation of the Consumer Fraud and Deceptive Business Practices Act.
• The state can fine a lender up to $10,000 per violation and refer cases for prosecution.
• You can't waive these protections, even by signing a contract that says you do.

Time limits on collecting a debt

Illinois courts have generally treated credit card debt as falling under the five-year period, because the full terms of a card account usually aren't in one signed document. A creditor with a signed written agreement may argue for 10 years. A written payment or new written promise to pay restarts the 10-year clock, so read how statutes of limitations work before you sign or pay anything on an old debt.

If a creditor wins a judgment, it can seek a wage deduction order. Under 735 ILCS 5/12-803, it can take no more than the lesser of 15% of your gross pay for the week or the amount by which your disposable earnings exceed 45 times the Illinois minimum wage. At the $15 state minimum, the first $675 a week is protected. Your federal rights with collectors are covered in debt collectors and your rights.

Where to check a lender and complain

1. 1 Check the license with the Illinois Department of Financial and Professional Regulation (IDFPR) or on NMLS Consumer Access.
2. 2 Ask for the APR in writing and confirm it is 36% or less, counting every fee.
3. 3 File a complaint with IDFPR if a lender charges more. IDFPR reports material violations to the Attorney General, and you can also file with the CFPB.

Common questions