Payday loans - Illinois finally puts some limits
It is interesting how some of the most liberal states are always the last ones to protect a little man. Finally, payday loan companies in Illinois are going to have certain limits on how much interest they can charge - under legislation Governor Pat Quinn signed into law several days ago. Under the new rules, interest rates would be capped at 99% for consumer installment loans of $4,000 and less, and at 36% for loans that are $4,000 or more. Previously, Illinois had no limits whatsoever on how much payday loan companies could charge in interest. As a result some borrowers were paying rates as high as 700 to 1,000%, that is according to Quinn office.
I am not sure if the upcoming November elections have anything to do with that, Quinn is trailing to his Republican opponent in every poll, but Illinois consumers using payday loans, have paid higher rates and fees for much longer than borrowers in quite more conservative Arizona or Georgia.
Interest rates on Illinois payday loans are capped at $15.50 for every $100 borrowed over a two-week period. Additionally, payday loan shops must now verify that a borrower has the ability to repay a loan and would not be allowed to issue payday loans if monthly payments would exceed 25% of a gross monthly income. That limit drops to 22.5% for those taking out longer consumer installment loans. As our Attorney General Lisa Madigan, whose office helped lead negotiations, put it - the restrictions stops Wild West lending practices that often preyed on the desperate and trapped borrowers in a cycle of debt. That is very nice. Then she continues - the interest rates are still way higher than those available at a bank or even by using a credit card. Hello, the exact reason people go for payday loans, Illinois or elsewhere, because they have no other options. Other major provisions will prevent balloon payments, where payments start low but grow increasingly expensive, and require loan companies to enter more information into a state-run database to track lending practices. This Illinois law goes into effect on January 1, and payday loans taken out before then will not face the new restrictions. More on payday loan assistance.
Sun Jun 27, 2010 12:06AM | Copyright: www.bad-credit-advisor.com | More in Payday Loan | Comments (0)
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