Bill > SB1853

This bill amends the Consumer Installment Loan Act and the Predatory Loan Prevention Act to make several changes to consumer lending regulations. The bill modifies how annual percentage rates (APRs) are calculated, switching from a military APR calculation to using the federal Truth in Lending Act's method. It introduces a new provision that allows lenders to charge the annual percentage rate plus the Federal Funds Rate, which is the interest rate at which banks lend to each other overnight. The bill explicitly prohibits lenders from charging any penalty for loan prepayment, a significant consumer protection measure. Additionally, the legislation requires lenders to offer borrowers a free credit education program or seminar before disbursing loan proceeds, covering topics such as credit score establishment, improvement, and understanding. The bill sets new maximum loan terms based on loan amount: loans over $10,000 can have repayment terms up to 181 months, while loans of $10,000 or less must have repayment terms between 12 and 60.15 months. Starting in January 2026, lenders will be required to report borrowers' payment performance to at least one nationwide consumer reporting agency. These changes aim to provide more transparency, reduce predatory lending practices, and help consumers better understand and manage their credit.

https://www.ilga.gov/legislation/BillStatus.asp?DocNum=1853&GAID=18&DocTypeID=SB&SessionID=114&GA=104