Illinois Loan Regulations You Should Know

Every state has its own regulations regarding loans. Loan regulations are an important precaution to protect borrowers, helping them know their rights, and feel secure when they acquire a loan. There are many illegal lenders everywhere who are just waiting to find their prey. Illinois is one of these states.

Most victims of illegal lenders who overcharge their borrowers are consumers who do not know the law regarding loans and debts. Avoid being a victim. Do your research and know your rights as a consumer. Examine the guidelines below to familiarize yourself with loan regulations before acquiring any loan.

The Regulations

The Illinois Consumer Installment Loan act was implemented starting September of 1963. The state wanted to have a strong regulation to protect each consumer when acquiring a loan. Familiarize yourself with the loan regulations for the state of Illinois so you can avoid being a victim.

Loan Amount

Under the Illinois loan law and legislation, the borrower can only receive the maximum amount of $1000 or 25% of the borrower’s gross monthly income for payday loans. For installment payday loans, the borrower can only receive 22% of their gross monthly income. Acquiring two loans at the same time is strictly prohibited.

Fees and Other Charges

Lenders are prohibited from charging more than $15.50 per $100  borrowed on payday loans for 14 days. If you encounter a lender who overcharges a loan, it is better to talk to your local Division of Financial Institutions and file a complaint.

Loan Term

In regards to loan terms, the Illinois Consumer Installment Loan Act sets a minimum and a maximum number of days for loan terms. Borrowers can take a payday loan for a minimum of 13 days and a maximum of 120 days.

If you wish to apply for another loan after paying your current loan, there will be a cool-off period of 7 days after 45 days of acquiring a loan. Installment payday loans, on the other hand, are offered after 112 to 180 days.

Rollovers are not allowed because it might cause the repayment period of another loan to extend. A rollover loan is when a loan is renewed automatically if not paid in full within the agreed loan term. The debt will then be carried over to the new loan.

Loan Covered by Regulations

There are two types of loans under the Illinois Consumer Installment Loan Act. If you are planning to acquire one of these two loan options, you will be under the safety of the ICILA.

  • Car Loans: If your loan’s purpose is to purchase a vehicle, you can apply for a car loan. Under this loan plan, you can borrow for up to $40,000. The car that you are going to purchase will serve as collateral for the loan.
  • Personal Loan: Just like in other states, Illinois personal loans are unsecured, meaning there is no required collateral when you apply for it. Lending companies can lend you up to $25,000, which you can spend on expenses, such as medical bills, personal finances, and more.

Being familiar with the loan regulations will help you steer clear of predatory lending. This loan scam is prevalent in Illinois, so look out for it when considering taking out a loan. There have been numerous reports about consumers being victimized by this type of fraud.

What is predatory lending, you might ask? Predatory lending is any loan that offers unfair and abusive loan terms. These con artists use deception and coercion to convince consumers to take out a loan. Even borrowers who cannot afford the terms offered by these predators are strongly encouraged to acquire a loan under their company.

These lenders do not care if the borrower can pay back the loan or not. It is vital to understand your rights as a borrower in the state of Illinois to avoid becoming a victim of one of these lenders.

Loan regulations are imposed to ensure the security and safety of borrowers. These laws give authorities the power to go after criminals who take advantage of a consumer’s situation. Most of these criminals are very good at convincing unaware borrowers, even looking and speaking like professionals. The terms they give you can be enticing, which is why you should do your research before agreeing to loan terms.

The rule of the thumb to avoid being a victim is if the offer is too good to be true, it probably is. They may be offering you low interest rates, but little do you know there are hidden charges that will surprise you when you begin paying for your loan. Be vigilant when choosing a lender. Properly investigate the lending company and look for lending red flags.


Before you go to a lending company and apply for a loan, you should know your rights as a borrower. Knowing what is allowed and what is prohibited by law will help you avoid lenders who might take advantage of your situation. Remember to choose your lender wisely to avoid falling prey to these predatory lenders.