Payday Loans are Legal in Illinois

Beware of predatory lending

Payday Lenders in Illinois

Payday loans are short-term lending options commonly used to meet emergency financial needs such as unexpected bills, medical expenses or car repairs. They’re commonly used by people with low credit scores or no history who do not qualify for traditional bank or credit union loans. They appeal for being more accessible than other forms of credit despite high rates and fees associated with them.

While this is true for most states, some, like Illinois, have enacted high regulations on the industry, essentially pushing all lenders out of the state when Illinois enacted the Predatory Loan Prevention Act, which imposed a 36% APR cap on consumer loans. The law has been praised for protecting borrowers from the debt trap associated with payday loans.

When selecting a payday loan lender, it’s important to conduct research and assess the lender’s reputation and terms. If they are not licensed, they may not be following the required caps on interest rates and fees that Illinois has in place to protect borrowers. Opting for licensed lenders that are transparent about their fees and interest rates is recommended. It’s advisable to avoid lenders that use aggressive advertising tactics, such as guaranteed approval or no credit checks, and check online reviews and ratings to gauge the lender’s reputation and quality of customer service.

Payday Loan Laws

While they are legal in Illinois, the state imposes stringent regulations on payday loans to safeguard consumers from exploitative lending practices. Lenders must acquire a state license and abide by a myriad of guidelines, including limitations on borrowing amounts and interest rates. Furthermore, lenders are obligated to furnish borrowers with transparent and unambiguous details regarding the loan’s conditions, such as the total cost of borrowing, and any additional charges that might incur. The objective of these regulations is to avert consumers from getting caught in a cycle of debt and to ensure that payday lenders function in an equitable and transparent manner.

The State of Illinois has several pieces of legislation that govern payday loans:

Loan Terms and Conditions

Maximum loan amount: $1000 or 25% or monthly income (whichever is less)

Maximum Interest Rate: 436%

Minimum loan term: 13 days

Maximum loan term: 120 days

Number of rollovers allowed: none

Finance charges: $1 verification fee

Legal action: 10 Years

Certified Payday Lenders in Illinois

Company Name	Company score	License Status
AmeriCash Holding LLC	7.6	Valid
CNG Financial Corporation	7.2	Valid
CURO Intermediate Holdings	6.5	Valid
ENOVA International, Inc	6.1	Valid
CHECK INTO CASH INC	5.8	Valid
Populus Financial Group, Inc.	5.1	Valid

History of Illinois Payday Loans

Attempts at regulation and changes in the lending landscape mark the history of payday loans in Illinois. In 2000, Illinois passed laws to regulate loans with terms less than 30 days, leading payday lenders to extend loan terms to 31 days. Five years later, the Payday Loan Reform Act (PLRA) sought to regulate loans based on a borrower’s ability to pay, limiting loan terms to less than 120 days and prohibiting unlimited rollovers. However, payday lenders began offering longer-term loans to avoid the law. By 2005, triple-digit APR installment payday loans became common. In 2011, the Illinois Payday Loan Reform Act created Installment Payday Loans and the Consumer Installment Loan Act. In 2021, SB 1792 capped rates on payday loans and all consumer loans under $40,000 at 36%. Since then, almost all payday lenders have left the state.

State Resources

How to file a complaint

Borrowers can submit a complaint against a payday lender through the Division of Financial Institutions. There is an online form available on their website and all information must be disclosed for action to be taken. Borrowers also have the option to mail the form. It is important to note that the Division does not represent the complainant and cannot make rulings on complaints. If a complaint involves a financial institution’s internal policies or guidelines rather than a violation of the law or regulation, the Division may not have the authority to provide relief. In such cases, the Division will guide the complainant on other ways to pursue their complaint, such as by consulting a private attorney or initiating a court proceeding.

Illinois Payday Loans Debt Relief

How to Get out of Payday Loan Debt?

If you find yourself grappling with payday loan debt in Illinois, there are various measures you can take to regain financial stability. The initial step is to establish communication with your lender to explore the possibility of renegotiating the repayment terms or devising an alternative repayment plan. Consider exploring debt consolidation or a debt management plan to alleviate your debt load and reduce the interest rates you are charged. It may be helpful to seek out additional sources of revenue, such as a secondary job or liquidating unwanted possessions. If you’re struggling to manage your debt on your own, credit counseling services or a bankruptcy attorney may be able to offer valuable guidance.

Support Resources

Types of Quick Loans in Illinois

Title Loans Title loans are a type of quick loan where borrowers can use their vehicle's title as collateral. In Illinois, the Title Loan Reform Act regulates these loans, mandating that lenders be licensed and limits the amount of interest and fees they can impose. Regardless, title loans can carry high interest rates and usually have short repayment terms, making them a high-risk option for borrowers. Borrowers may even risk losing their vehicle if they fail to pay back the loan. It is essential to carefully comprehend the terms and conditions of a title loan before accepting it, ensuring that you can repay it on time.

Installment Loans Installment loans are a borrowing option that lets you make scheduled payments over a predetermined period. They are regulated by the Consumer Installment Loan Act, which lays out the terms and conditions of the loan. Unlike payday loans, which often have to be repaid within a couple of weeks, installment loans offer longer repayment terms that can span from a few months to several years. It's crucial to remember that while installment loans offer flexibility, they can still come with high interest rates and fees.

Lines of Credit A line of credit is a type of loan that allows borrowers to access a set amount of funds on an as-needed basis. In Illinois, lines of credit are available through banks, credit unions, and online lenders. Unlike traditional loans, lines of credit don't have a fixed repayment term, and borrowers only have to pay interest on the amount they borrow. Lines of credit can be secured or unsecured and can come with variable or fixed interest rates. While they offer flexibility and convenience, they can also be risky if not managed responsibly.

Alternatives to Payday Loans in Illinois

Personal Loans

Personal loans are a popular type of unsecured loan that is available in Illinois. Borrowers use these loans for various purposes, such as home improvements, debt consolidation, or unexpected expenses they might encounter. Personal loans come with fixed interest rates and set monthly payments, making them easier to budget than other types of loans. Borrowers with excellent credit can typically access lower interest rates and more favorable repayment terms from lenders. In comparison, those with poor credit may face higher rates and stringent eligibility requirements from creditors.

Bridge Loans

The name of a Bridge Loan speaks for itself. It is a short-term borrowing solution designed to bridge the gap between selling your current home and purchasing a new one. A Bridge Loan allows you to leverage the equity accumulated in your existing home to finance a down payment or mortgage on your new property. The monthly payments consist only of interest, with a shorter term and fixed interest rates, until your current home is sold and the Bridge Loan is repaid in full. Compared to conventional home loans, Bridge Loans typically have a quicker application, approval, and funding process, making them an attractive option for those who need immediate funds to secure their new home.

Home Equity Loans

Home equity loans give homeowners an opportunity to borrow money based on the equity they have built in their homes. In Illinois, home equity loans are regulated under the Homeowner's Equity Protection Act (HOEPA). They are flexible and can be used for many different purposes, such as paying for home renovations, consolidating debt, or making big purchases. Home equity loans usually carry lower interest rates since they are secured by the home. Borrowers need to realize, though, that taking out money against the equity in their home puts it at risk, and failure to repay the loan could lead to foreclosure proceedings being taken against it. It is crucial to approach home equity loans with caution, as they can come with both benefits and risks.

Bad Credit Loans in Illinois

Bad credit loans are a type of loan that is available to borrowers in Illinois who have poor credit or limited credit history. These often have higher interest rates and more fees than traditional loans and could require collateral or a co-signer to qualify. Bad credit loans can be used for debt consolidation, home repairs, or unexpected expenses.

Illinois Small Business Loans

Small business loan options in Illinois:

SBA loans: This federal program provides loans to small businesses through banks and other approved lenders.
Community Advantage Loans: These SBA loans are designed for small businesses located in underserved communities.
Microloans: These small loans, typically less than $50,000, are offered by non-profit organizations and community lenders.
Traditional Bank Loans: Small businesses can also apply for traditional bank loans, although they often require collateral and a strong credit history.
Business Lines of Credit: This type of loan provides businesses with a flexible credit line to draw from as needed.

VA loans in Illinois

VA loans are a type of home loan available to veterans, active-duty military members, and their spouses. In Illinois, VA loans are backed by the Department of Veterans Affairs and offered by various lenders. VA loans provide several benefits, including no down payment requirements, no private mortgage insurance (PMI), and competitive interest rates. Additionally, VA loans allow borrowers to finance up to 100% of the home's value, making homeownership more accessible for those who have served their country. To qualify for a VA loan in Illinois, borrowers must meet certain eligibility requirements, such as having a valid Certificate of Eligibility and meeting minimum credit score and income standards. Overall, VA loans can be a great option for eligible veterans and military members looking to purchase a home in Illinois.

Illinois Student Loans

Many options are available to Illinois students to help finance their college education. These options include:

Federal Student Loans:

Illinois Student Assistance Commission (ISAC) Loans: Offered to Illinois residents attending college in-state and can provide additional financial assistance.postsecondary institutions in the state, based on financial need and other factors.
Illinois Veteran Grant (IVG): This program provides tuition and fee exemptions for eligible Illinois veterans attending Illinois state-supported universities and community colleges.
Golden Apple Scholars of Illinois: This program provides scholarships and loan forgiveness for students pursuing careers in teaching in Illinois schools.
Private Student Loans: Offered by banks and other lenders, these loans can be used to cover educational expenses not covered by federal loans.

Illinois Income Information

The recently released 2021 U.S. Census reports show Illinois having a median household income of $72,563, slightly higher than the national median of $70,717. Illinois is home to a thriving manufacturing industry, providing employment and income for many residents. The state’s progressive income tax system ensures that higher earners are taxed at a higher rate than lower earners, providing additional revenue for state programs and services. Illinois’s median household income varies widely by county, with Kendall County being the highest at $96,854, 40% higher than the state average, and Alexander County being the lowest at $34,709, 45% below the state average. The state’s poverty rate was 12.1% in 2021.

United States Census Bureau. “Poverty in the United States: 2021.” Accessed on April 20, 2023.
United States Census Bureau. U.S. Census Bureau QuickFacts: Illinois. Accessed on April 20, 2023.

Illinois Payday Lender Complaints

Below are trends associated with some payday lenders in Illinois, as reported to the Consumer Financial Protection Bureau.

Company Name	Count
AmeriCash Holding LLC	24
CNG Financial Corporation	16
CURO Intermediate Holdings	10
ENOVA International, Inc	5
CHECK INTO CASH INC	5
Populus Financial Group, Inc. (F/K/A Ace Cash Express)	3
Total Complaints	235

Consumer Financial Protection Bureau. Consumer Complaint Database. Accessed on April 20, 2023.

Most Common Issues

Complaint type	Count
Struggling to pay loan	64
Unexpected fees or interest	56
Can’t contact lender	19
Can’t stop withdrawals from bank account	17
Loan payment wasn’t credited	16

What are the main reasons residents of Illinois apply for payday cash advance online or offline

Payday loans are typically used for nonnegotiable everyday expenses like your rent, utilities, and groceries. Per data reported by Pewtrust, the percentage of reasons described below

Reason	Share
Regular Expenses (Utilities, car payment)	53%
Unexpected emergency/expense	16%
Rent/Mortgage	10%
Something Special	8%
Other	5%
Did not answer	2%

Payday Lenders by City

Chicago
Aurora
Joliet
Naperville
Rockford
Springfield
Elgin
Peoria
Waukegan
Champaign

Cicero
Evanston
Bloomington
Schaumburg
Arlington Heights
Bolingbrook
Decatur
Palatine
Skokie
Des Plaines

Orland Park
Oak Lawn
Berwyn
Mount Prospect
Tinley Park
Oak Park
Wheaton
Normal
Hoffman Estates
Downers Grove

Frequently Asked Questions

Will applying for a payday loan impact my credit?

Applying for a payday loan in Illinois may impact your credit, as some lenders will check your credit score during the application process, which can result in a soft or hard credit inquiry.

What do I need to apply for a payday loan?

To apply for a payday loan in Illinois, you typically need to provide personal information, proof of income, and an active checking account, with additional requirements varying depending on the lender.

Can I cancel my payday loan?

Borrowers are entitled to a full refund of all fees and interest paid if they cancel the loan by the end of the business day following the day it was issued according to Illinois law.

Can a payday loan lender garnish my wages?

Yes, a payday loan lender in Illinois can potentially garnish a borrower’s wages with a court order if they default on the loan, but Illinois law provides some protections for borrowers, including limits on the amount that can be garnished and requirements for notification and opportunity for a hearing.

Can spouses have separate loans?

Yes, spouses can have separate loans in Illinois. Each individual can apply for a loan based on their own creditworthiness and financial situation, and the loan will be in their own name.

When will I receive my funds if I am approved for a payday loan?

If approved for a payday loan, funds can typically be received on the same or next business day through direct deposit or in-person pickup, depending on the lender’s policies.

What happens if I can’t repay my payday loan on time?

If a borrower is unable to repay their payday loan on time, they may be charged late fees, reported to credit bureaus, and potentially sued to collect the debt, and while the lender may offer to extend the repayment period, this can result in additional fees and interest charges, so it’s important to communicate with the lender to discuss repayment options and potentially avoid defaulting on the loan.

When could I apply for another payday loan?

In Illinois, you can typically apply for another payday loan once you have paid off your existing loan in full, but a cooling-off period of seven days is required after having a payday loan for 45 consecutive days according to state law.