Installment vs. PDL?
Date: Wed, 03/18/2009 - 07:38
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I'd like to clarify the difference between illegal pdl rates and legal rates.
We have notes with 3 storefronts here in illinois - Sun Loan, World Finance, & Banner Finance. Each place charges more than 100% interest.
I have the contract from World here and have read it over and over and cannot find any information about it being backed by a bank (like Cash Call). There is just a statement about arbitration, finance computation, and the vender is listed in all cases as the local storefronts address - no mention of backing by a bank.
These notes are "secured" with personal property.
So my question is - are these loans protected from state finance limits by a bank? If so should it be in their contracts? OR is there some special rule about secured financing that is separate form the Illinois limit of 35%?
We actually don't owe much more on these notes - but i've sure paid a lot in interest and if there's any way we could recapture some of that it'd be great.
What is the name of the companies? They need to have a license i
What is the name of the companies? They need to have a license in IL to lend.
Here is the consumer section about installment loans in IL.
Banner Finance Sun Loan World Finance All three are license
Banner Finance
Sun Loan
World Finance
All three are licensed in Illinois - but the license lookup only tells me that they are licensed - not whether they have been licensed at higher than state interest limits. Would I just need to contact the Illinois Financial Division to find out if they are approved for the credit limits they are charging?
I would think that would be the best way to find out.
I would think that would be the best way to find out.
Okay - so the Division of Consumer Credit was totally unhelpful
Okay - so the Division of Consumer Credit was totally unhelpful and could only say "if you signed the papers you need to pay the loan"...they couldn't explain why.
With a little more frustrated research I was able to turn this up
(205 ILCS 670/15) (from Ch. 17, par. 5415)
Sec. 15. Charges permitted.
(a) Every licensee may lend a principal amount not exceeding $40,000 and may charge, contract for and receive thereon interest at the rate agreed upon by the licensee and the borrower, subject to the provisions of this Act.
(b) For purpose of this Section, the following terms shall have the meanings ascribed herein.
"Applicable interest" for a precomputed loan contract means the amount of interest attributable to each monthly installment period. It is computed as if each installment period were one month and any interest charged for extending the first installment period beyond one month is ignored. The applicable interest for any monthly installment period is that portion of the precomputed interest that bears the same ratio to the total precomputed interest as the balances scheduled to be outstanding during that month bear to the sum of all scheduled monthly outstanding balances in the original contract.
So for anyone in Illinois - Installment loans are protected by secondary legislation that says that any interest rate agreed to by lender & borrower is legal (the guy at the Credit Division said he's seen them as high as 1200%...can you frickin' believe that). If you really can't afford to make your payments - your options are basically only to revoke your wage assignment and then try to make payment arrangements.
I'm very happy to know that we are almost ready to pay these loans off - especially after finding out that Illinois basically has no cap on this sort of lending - that's insane to me but hey - what can you do.
What there saying is you signed the agreement binding you to the
What there saying is you signed the agreement binding you to the terms. These companies are thieves with what they charge but they would say you should have read the contract and you had the right to refuse.
In IL there are two sets of laws for consumer loans. 1) The Con
In IL there are two sets of laws for consumer loans. 1) The Consumer Installment Loan Act (CILA), and 2) The Payday Loan Reform Act (PLRA).
PLRA has a cap on the interest, while CILA has NO cap (you quoted CILA above).
It depends which category your loan falls into as to which laws it has to follow.
PLRA defines a payday loan as any loan 1) with a term less than 120 days, 2) greater than 36%, and 3) secured by either a wage assignment or post-dated check. If you loan meets those conditions, then it falls under PLRA and has to follow those laws.
Since the PLRA was enacted in 2005, "Payday" lenders have found ways to circumvent the laws. IE they give a loan out for 121 days, call it an installment loan, and then they can follow CILA laws instead of PLRA.
