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A Complete Guide to Payday Loan Consolidation in Illinois
Illinois used to suffer heavily from crushing payday loan practices that saw APR’s reach upwards of 400%. Legislators looked to solve these issues, implementing APR caps and other consumer-friendly statutes. Still, many in Illinois continue to face problems with payday loans. Luckily, there’s a solution in sight: payday loan consolidation.
Payday loan laws in Illinois
In the state of Illinois, payday loan laws have been amended in recent years to be more favorable to borrowers. The APR is now limited to a max of 36% as of March 2021, one of the lowest capped rates in the country. The maximum loan amount is $1000 or 25% of the gross monthly income of the borrower, whichever is less. The loan period is between 13 and 120 days.
As for additional fees, lenders can charge a $1 verification fee as well as a $25 NSF fee. Prior to the new law, interest rates on payday loans in the state hovered around 400%.
All payday loans are recorded in a database maintained by the Illinois Department of Financial and Professional Regulations (IDFPR), the state regulator on payday loans. Lenders are required to enter in all information relating to a loan and must check the database before issuing new loans out to consumers. Rollovers are prohibited and borrowers can only take out two payday loans at a time. Illinois residents must wait seven days after 45 days of having a loan before they can receive another loan. Installment payday loans must last between 112 and 180 days.
Read more about payday loan laws in Illinois.
What will happen if you can’t repay a payday loan in Illinois
Criminal charges are prohibited against borrowers who are unable to pay back their payday loans, meaning you won’t go to jail. However, lenders could file a lawsuit against you, get a judgment against you in court, or legally pursue the debt through the court systems. In Illinois, lenders are not allowed to go after a borrower’s personal property to secure money for a payday loan.
As of July 2020, lenders are not required to check a borrower's ability to repay. You enter into an agreement at your own risk. If a borrower needs assistance with payday loans or other lender issues, contact the Illinois Department of Financial and Professional Regulation, where you can file a complaint or verify the license of a lender.
What is the statute of limitations on payday loans in Illinois?
In Illinois, the statute of limitations on payday loans is ten years. This means that if you are unable to pay back your loan, the lender has ten years to try and collect the debt via the court system.
How to consolidate your payday loans in Illinois
Payday loan consolidation, also known as credit consolidation and payday loan relief, lumps your loans together to give you one reduced monthly payment. Typically, borrowers work with a third party that will usually pay off your current loans and negotiate with the lenders to reduce any outstanding loan terms. In exchange, borrowers pay them a fixed rate.
Another option is to take out a loan and immediately pay down all your other loans. This can be helpful to get all your loans on one plate with a single payment and interest rate. However, like most loans, they are subject to late fees and penalties if you miss a payment.
A debt management plan (DMP) lets you make one set monthly payment on a collection of your debts rolled together at a lower interest rate. The difference is that you’re still paying back your original loan amount as opposed to entering a payment plan with a third-party company.
By the numbers: Payday lenders in Illinois
- Max loan term: 120 days
- Average loan amount: $400
- Maximum loan amount: $1000 (or 25% of the gross monthly income)
- APR Cap: 36%
- Number of payday lenders in Illinois: 313
- Average 14-day payday loan APR: 36%
- Collection fees: $1 verification fee plus a fee of $25 or less for insufficient funds
- Poverty rate in Illinois: 11.5%
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Other resources for help paying my payday loan in Illinois
Payday loan consolidation can be the best move if you find yourself struggling to pay back your loan. Whichever debt consolidation method you decide on, it can be the first step back toward financial stability. Contact the Illinois Department of Financial and Professional Regulation if you are in need of payday loan help. There you can also file a complaint about a lender or issue you’ve encountered.
Chicago Office: 100 W Randolph St, 9th Floor, Chicago, IL 60601
Springfield Office: 320 W Washington, 3rd Floor, Springfield, IL 62786
Phone Number: 312-814-5145
Additional state resources to utilize: