Kinds of online loans in Illinois
Payday lenders market their products as suitable solutions for temporary cash-flow problems. Though not always true, Illinois law enables consumers enjoy stronger protections from the payday loan industry’s worst practices.
Types of loans
Following are the three types of loans in vogue in Illinois State
- Small consumer loans
- Payday installment loans
- Payday loan
Small consumer loans
Considered the least expensive, small consumer loans are charged an APR of not more than 99%. A payday lender that sells payday loans cannot be selling small consumer loans at the same time. Illinois small consumer loans have lower interest rates and have longer terms. Also the new law prohibits lenders from rolling over a loan within the first 75 days. A small consumer’s loan cannot be more than 22.5% of your income.
Small consumer loans have longer terms in addition to lower interest rates. Also the law prohibits lenders from rolling you over into a new loan in the first 75 days of your loan’s term. A small consumer loan’s monthly payments can be no more than 22.5% of your gross monthly income.
Payday Installment loan
These often have longer terms, lasting up to 6 months. At times a payday loan can carry a high APR making it difficult to pay back the amount. In this scenario, law permits you to negotiate an interest-free repayment plan. You must request for this plan after you have been in debt for more than 35 days.
Lenders are not allowed to issue a new Illinois cash advance if it would result in a more than 45 days debt. Like small consumer loans, payday installment loans have longer terms than conventional payday loans. However, payday installment loans are more expensive than small consumer loans, with APRs running as high as 400%.
Illinois law provides payday loan consumers with some protections against the cycle of debt. A lender cannot roll over your loan if doing so would keep you in debt for longer than six months. Also, a payday installment loan’s monthly payments can be no more than 22.5% of your gross monthly income.
- Minimum loan term of 13 days
- Early repayment plan should not carry additional cost or penalties
- The maximum loan amount that can be borrowed is $1,000
- Lenders cannot offer a loan to borrowers who have other outstanding loans
A payday loan is truly a short-term loan; it has to be paid back in two to four weeks. Like the payday installment loan, a payday loan can carry an APR as high as 400%. In the case of default however under Illinois law, you are entitled to enter into an interest-free repayment plan with your lender after you’ve been in debt for more than 35 days.
Additionally, the law prohibits lenders from issuing a new payday loan if it would result in your being in debt for more than 45 days in a row. Together, this provides payday borrowers some breathing room to pay off their debt without getting buried under additional charges and fees.