Bill Text: IL SB1118 | 2009-2010 | 96th General Assembly | Enrolled
Bill Title: Amends the Payday Loan Reform Act. Makes a technical change in a Section concerning the short title.
Spectrum: Partisan Bill (Democrat 3-0)
Status: (Passed) 2010-08-03 - Public Act . . . . . . . . . 96-1421 [SB1118 Detail]
Download: Illinois-2009-SB1118-Enrolled.html
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1 | AN ACT concerning business.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Interest Act is amended by changing Section | ||||||
5 | 4 as follows:
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6 | (815 ILCS 205/4) (from Ch. 17, par. 6404) | ||||||
7 | Sec. 4. General interest rate. | ||||||
8 | (1) Except as otherwise provided in Section 4.05, in all | ||||||
9 | written contracts it shall be lawful for the parties to
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10 | stipulate or agree that 9% per annum, or any less sum of | ||||||
11 | interest, shall be
taken and paid upon every $100 of money | ||||||
12 | loaned or in any manner due and
owing from any person to any | ||||||
13 | other person or corporation in this state, and
after that rate | ||||||
14 | for a greater or less sum, or for a longer or shorter time,
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15 | except as herein provided. | ||||||
16 | The maximum rate of interest that may lawfully be | ||||||
17 | contracted for is
determined by the law applicable thereto at | ||||||
18 | the time the contract is
made. Any provision in any contract, | ||||||
19 | whether made before or after July
1, 1969, which provides for | ||||||
20 | or purports to authorize, contingent upon a
change in the | ||||||
21 | Illinois law after the contract is made, any rate of
interest | ||||||
22 | greater than the maximum lawful rate at the time the contract
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23 | is made, is void. |
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1 | It is lawful for a state bank or a branch of an | ||||||
2 | out-of-state bank, as those
terms are defined in Section 2 of | ||||||
3 | the Illinois Banking Act, to receive or to
contract to receive
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4 | and collect interest and charges at any rate or rates agreed | ||||||
5 | upon by
the bank or branch and the borrower.
It is lawful for a | ||||||
6 | savings bank chartered under the Savings Bank Act or a
savings | ||||||
7 | association chartered under the Illinois Savings and Loan Act | ||||||
8 | of 1985
to receive or contract to receive and collect interest | ||||||
9 | and charges at any rate
agreed upon by the savings bank or | ||||||
10 | savings association and the borrower. | ||||||
11 | It is lawful to receive or to contract to receive and | ||||||
12 | collect
interest and charges as authorized by this Act and as | ||||||
13 | authorized by the
Consumer Installment Loan Act and by the | ||||||
14 | "Consumer Finance Act", approved July
10,
1935, as now or | ||||||
15 | hereafter amended, or by the Payday Loan Reform Act. It is | ||||||
16 | lawful to charge, contract
for, and receive any rate or amount | ||||||
17 | of interest or compensation with
respect to the following | ||||||
18 | transactions: | ||||||
19 | (a) Any loan made to a corporation; | ||||||
20 | (b) Advances of money, repayable on demand, to an | ||||||
21 | amount not less
than $5,000, which are made upon warehouse | ||||||
22 | receipts, bills of lading,
certificates of stock, | ||||||
23 | certificates of deposit, bills of exchange, bonds
or other | ||||||
24 | negotiable instruments pledged as collateral security for | ||||||
25 | such
repayment, if evidenced by a writing; | ||||||
26 | (c) Any credit transaction between a merchandise |
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1 | wholesaler and
retailer; any business loan to a business | ||||||
2 | association or copartnership
or to a person owning and | ||||||
3 | operating a business as sole proprietor or to
any persons | ||||||
4 | owning and operating a business as joint venturers, joint
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5 | tenants or tenants in common, or to any limited | ||||||
6 | partnership, or to any
trustee owning and operating a | ||||||
7 | business or whose beneficiaries own and
operate a business, | ||||||
8 | except that any loan which is secured (1) by an
assignment | ||||||
9 | of an individual obligor's salary, wages, commissions or
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10 | other compensation for services, or (2) by his household | ||||||
11 | furniture or
other goods used for his personal, family or | ||||||
12 | household purposes shall be
deemed not to be a loan within | ||||||
13 | the meaning of this subsection; and
provided further that a | ||||||
14 | loan which otherwise qualifies as a business
loan within | ||||||
15 | the meaning of this subsection shall not be deemed as not | ||||||
16 | so
qualifying because of the inclusion, with other security | ||||||
17 | consisting of
business assets of any such obligor, of real | ||||||
18 | estate occupied by an
individual obligor solely as his | ||||||
19 | residence. The term "business" shall
be deemed to mean a | ||||||
20 | commercial, agricultural or industrial enterprise
which is | ||||||
21 | carried on for the purpose of investment or profit, but | ||||||
22 | shall
not be deemed to mean the ownership or maintenance of | ||||||
23 | real estate
occupied by an individual obligor solely as his | ||||||
24 | residence; | ||||||
25 | (d) Any loan made in accordance with the provisions of | ||||||
26 | Subchapter I
of Chapter 13 of Title 12 of the United States |
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1 | Code, which is designated
as "Housing Renovation and | ||||||
2 | Modernization"; | ||||||
3 | (e) Any mortgage loan insured or upon which a | ||||||
4 | commitment to insure
has been issued under the provisions | ||||||
5 | of the National Housing Act,
Chapter 13 of Title 12 of the | ||||||
6 | United States Code; | ||||||
7 | (f) Any mortgage loan guaranteed or upon which a | ||||||
8 | commitment to
guaranty has been issued under the provisions | ||||||
9 | of the Veterans' Benefits
Act, Subchapter II of Chapter 37 | ||||||
10 | of Title 38 of the United States Code; | ||||||
11 | (g) Interest charged by a broker or dealer registered | ||||||
12 | under the
Securities Exchange Act of 1934, as amended, or | ||||||
13 | registered under the
Illinois Securities Law of 1953, | ||||||
14 | approved July 13, 1953, as now or
hereafter amended, on a | ||||||
15 | debit balance in an account for a customer if
such debit | ||||||
16 | balance is payable at will without penalty and is secured | ||||||
17 | by
securities as defined in Uniform Commercial | ||||||
18 | Code-Investment Securities; | ||||||
19 | (h) Any loan made by a participating bank as part of | ||||||
20 | any loan
guarantee program which provides for loans and for | ||||||
21 | the refinancing of
such loans to medical students, interns | ||||||
22 | and residents and which are
guaranteed by the American | ||||||
23 | Medical Association Education and Research
Foundation; | ||||||
24 | (i) Any loan made, guaranteed, or insured in accordance | ||||||
25 | with the
provisions of the Housing Act of 1949, Subchapter | ||||||
26 | III of Chapter 8A of
Title 42 of the United States Code and |
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1 | the Consolidated Farm and Rural
Development Act, | ||||||
2 | Subchapters I, II, and III of Chapter 50 of Title 7 of
the | ||||||
3 | United States Code; | ||||||
4 | (j) Any loan by an employee pension benefit plan, as | ||||||
5 | defined in Section
3 (2) of the Employee Retirement Income | ||||||
6 | Security Act of 1974 (29 U.S.C.A.
Sec. 1002), to an | ||||||
7 | individual participating in such plan, provided that such
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8 | loan satisfies the prohibited transaction exemption | ||||||
9 | requirements of Section
408 (b) (1) (29 U.S.C.A. Sec. 1108 | ||||||
10 | (b) (1)) or Section 2003 (a) (26 U.S.C.A.
Sec. 4975 (d) | ||||||
11 | (1)) of the Employee Retirement Income Security Act of | ||||||
12 | 1974; | ||||||
13 | (k) Written contracts, agreements or bonds for deed | ||||||
14 | providing for
installment purchase of real estate; | ||||||
15 | (1) Loans secured by a mortgage on real estate; | ||||||
16 | (m) Loans made by a sole proprietorship, partnership, | ||||||
17 | or corporation to
an employee or to a person who has been | ||||||
18 | offered employment by such sole
proprietorship, | ||||||
19 | partnership, or corporation made for the sole purpose of
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20 | transferring an employee or person who has been offered | ||||||
21 | employment to another
office maintained and operated by the | ||||||
22 | same sole proprietorship, partnership,
or corporation; | ||||||
23 | (n) Loans to or for the benefit of students made by an | ||||||
24 | institution of
higher education. | ||||||
25 | (2) Except for loans described in subparagraph (a), (c), | ||||||
26 | (d),
(e), (f) or (i) of subsection (1) of this Section, and |
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1 | except to the
extent permitted by the applicable statute for | ||||||
2 | loans made pursuant to
Section 4a or pursuant to the Consumer | ||||||
3 | Installment Loan Act: | ||||||
4 | (a) Whenever the rate of interest exceeds 8% per annum | ||||||
5 | on any
written contract, agreement or bond for deed | ||||||
6 | providing for the installment
purchase of residential real | ||||||
7 | estate, or on any loan secured by a mortgage
on residential | ||||||
8 | real estate, it shall be unlawful to provide for a
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9 | prepayment penalty or other charge for prepayment. | ||||||
10 | (b) No agreement, note or other instrument evidencing a | ||||||
11 | loan
secured by a mortgage on residential real estate, or | ||||||
12 | written contract,
agreement or bond for deed providing for | ||||||
13 | the installment purchase of
residential real estate, may | ||||||
14 | provide for any change in the contract rate of
interest | ||||||
15 | during the term thereof. However, if the Congress of the | ||||||
16 | United
States or any federal agency authorizes any class of | ||||||
17 | lender to enter, within
limitations, into mortgage | ||||||
18 | contracts or written contracts, agreements or
bonds for | ||||||
19 | deed in which the rate of interest may be changed during | ||||||
20 | the
term of the contract, any person, firm, corporation or | ||||||
21 | other entity
not otherwise prohibited from entering into | ||||||
22 | mortgage contracts or
written contracts, agreements or | ||||||
23 | bonds for deed in Illinois may enter
into mortgage | ||||||
24 | contracts or written contracts, agreements or bonds
for | ||||||
25 | deed in which the rate of interest may be changed during | ||||||
26 | the term
of the contract, within the same limitations. |
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1 | (3) In any contract or loan which is secured by a mortgage, | ||||||
2 | deed of
trust, or conveyance in the nature of a mortgage, on | ||||||
3 | residential real
estate, the interest which is computed, | ||||||
4 | calculated, charged, or collected
pursuant to such contract or | ||||||
5 | loan, or pursuant to any regulation or rule
promulgated | ||||||
6 | pursuant to this Act, may not be computed, calculated, charged
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7 | or collected for any period of time occurring after the date on | ||||||
8 | which the
total indebtedness, with the exception of late | ||||||
9 | payment penalties, is paid
in full. | ||||||
10 | (4) For purposes of this Section, a prepayment shall mean | ||||||
11 | the payment of the
total indebtedness, with the exception of | ||||||
12 | late payment penalties if
incurred or charged, on any date | ||||||
13 | before the date specified in the contract
or loan agreement on | ||||||
14 | which the total indebtedness shall be paid in full, or
before | ||||||
15 | the date on which all payments, if timely made, shall have been
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16 | made. In the event of a prepayment of the indebtedness which is | ||||||
17 | made on a
date after the date on which interest on the | ||||||
18 | indebtedness was last
computed, calculated, charged, or | ||||||
19 | collected but before the next date on
which interest on the | ||||||
20 | indebtedness was to be calculated, computed, charged,
or | ||||||
21 | collected, the lender may calculate, charge and collect | ||||||
22 | interest on the
indebtedness for the period which elapsed | ||||||
23 | between the date on which the
prepayment is made and the date | ||||||
24 | on which interest on the indebtedness was
last computed, | ||||||
25 | calculated, charged or collected at a rate equal to 1/360 of
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26 | the annual rate for each day which so elapsed, which rate shall |
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1 | be applied
to the indebtedness outstanding as of the date of | ||||||
2 | prepayment. The lender
shall refund to the borrower any | ||||||
3 | interest charged or collected which
exceeds that which the | ||||||
4 | lender may charge or collect pursuant to the
preceding | ||||||
5 | sentence. The provisions of this amendatory Act of 1985 shall
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6 | apply only to contracts or loans entered into on or after the | ||||||
7 | effective
date of this amendatory Act, but shall not apply to | ||||||
8 | contracts or loans
entered into on or after that date that are | ||||||
9 | subject to Section 4a of this
Act, the Consumer Installment | ||||||
10 | Loan Act, the Payday Loan Reform Act, or the Retail Installment | ||||||
11 | Sales
Act, or that provide for the refund of precomputed | ||||||
12 | interest on prepayment
in the manner provided by such Act. | ||||||
13 | (5) For purposes of items (a) and (c) of subsection (1) of | ||||||
14 | this Section, a rate or amount of interest may be lawfully | ||||||
15 | computed when applying the ratio of the annual interest rate | ||||||
16 | over a year based on 360 days. The provisions of this | ||||||
17 | amendatory Act of the 96th General Assembly are declarative of | ||||||
18 | existing law. | ||||||
19 | (Source: P.A. 94-13, eff. 12-6-05; 94-635, eff. 8-22-05; | ||||||
20 | 95-331, eff. 8-21-07.)
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21 | Section 99. Effective date. This Act takes effect upon | ||||||
22 |