On March 23, 2021, Illinois Governor J.B. Pritzker signed Public Act 101 658 (“P.A.101-658” or the “Act”) into law. In response to the passage of the Act, the Illinois Department of Financial and Professional Regulation (“IDFPR”) issued “FAQ” and “PLPA Reporting” notices to address industry questions about the new law, followed by Proposed Regulations implementing P.A.101-658. The Act is a far-reaching law that every lender directly, or even indirectly, conducting business in Illinois should carefully review. The IDFPR Proposed Regulation warrants even closer scrutiny by lenders conducting business in the state.
The Act amended Illinois’s Consumer Installment Loan Act (“CILA”), under which traditional installment lenders operate, and created a new law titled, the “Illinois Predatory Loan Prevention Act” (“PLPA”). The PLPA affects loans made pursuant to the following Illinois credit laws: (i) the Motor Vehicle Retail Installment Sales Act ("MVRSA"), the Retail Installment Sales Act ("RISA"), the Sales Finance Agency Act (“SFAA”), and the Payday Loan Reform Act (“PLRA”). The Act eliminated CILA’s existing Small Loan provisions and subjected any loan made by a non-exempt entity under CILA, PLPA, MVRSA, and SFAA to an “all-in” interest rate limit of 36%. The 36% rate cap is calculated in accordance with the Military Annual Percentage Rate (“MAPR”) under the federal Military Lending Act (“MLA”), and accompanying Department of Defense regulations (the “MLA Regulations”). While the interest rate limit refers to the definition of MAPR in the MLA Regulations, the interpretation of what is, and what is not included in the MAPR for purposes of the PLPA remains open to interpretation by the IDFPR, the Illinois Attorney General’s office, and Illinois courts. Predictably, the Act eliminated the payday and small dollar loan market in Illinois overnight.