car loans Illinois
Illinois car loans :
An installment loan also referred to as a check advance loan or Illinois cash advance installment loan or deferred deposit check loan is a small, short-term loan which does not require the borrower to have any kind of security.
The lenders of Payday advance car loans rely on the consumer’s previous employment and payroll and records to assess the creditworthiness of the borrower. For one to obtain such a loan in Illinois, one must have an email address and a valid checking account.
Normally, this type of loan will be funded to the borrower the next business day without requiring further personal details unless the lender cannot clearly verify the borrowers’ loan application information.
New Consumer Protection For Illinois car loans :
As of 21st March 2011, a new law was created that allows or rather gives Illinois consumers stronger protection from some lender’s worst practices. This law protects Illinois consumers from limitless loan roll-overs and also restricts that loan allocation should be based on the borrower’s ability to repay.
Moreover, this law also created a new type of loan from the existing installment loan called the small consumer loan; which is significantly cheaper than the conventional installment loan. Though these new protections have been put in place, consumers are advised to exercise a lot of caution in making the decision on whether to take an illinois installment loan to settle their emergency financial needs because the charges of short-term borrowing are still very high in Illinois.
Types of Illinois car loans :
There are three types of payday-like or car loans available in Illinois.
Small Illinois Consumer car loans :
This is the cheapest short-term loan available in Illinois. In this type of loan, Illinois law stipulates that the lender can charge a maximum of 99% of Annual Percentage Rate (APR) on a small consumer loan. Though this not actually cheap, it is significantly cheaper than an installment loan.
Apart from lower interest rates, this type of loan has longer terms of payments than car loans; stretching to a year or more. Having a long repayment period allows the borrower to keep payments at a manageable level.
The new law also prohibits lenders from rolling the borrowers over into a new loan within the initial 75 days of acquiring the loan, to ensure that the borrower stays in the short-term loan long enough to re-pay a considerable portion of the loan before the roll-over. Moreover, this law stipulates that the monthly payments of the small consumer loan should not be more than 22.5% of the borrowers’ gross monthly income.
Payday Installment Loan :
Payday car loans have longer repayment terms than the conventional car loans (just like small consumer loans), lasting up to six months. Nonetheless, the payday car loans are more costly than small consumer loans, in the sense that, their APR can go up to 400%. However, Illinois law offers some protection to installment loan consumers against falling into the vicious cycle of debt.
For instance, the law stipulates that the lender should not roll over the borrowers’ loan if by doing so will keep the borrower in debt for a period of more than six months. Moreover, the monthly payments of the payday installment loan should not be more than 22.5% of the borrowers’ gross monthly income.
Illinois Installment Loan :
This is a very short-term loan; which has to be paid back within two to four weeks after it has been issued. This type of loan can carry an APR of up to 400%. The combination of high-interest rates and extremely short repayment period makes this type of loan very expensive; thus, timely repayment is quite difficult.
Illinois law offers protection to borrowers in such as a case where the borrower is not able to repay the loan in time. If the borrower has been in debt for over 35 days, the law stipulates that he/she is entitled to enter into an interest-free debt repayment plan with the lender.
Additionally, the lender is not allowed to issue a new installment loan to the borrower if it will lead to the borrower being in debt for more than 45 consecutive days. These two provisions are intended to protect payday borrowers from getting buried under extra fees and charges by giving the borrower some breathing space to pay off their existing debt.
Consumer Responsibilities under Illinois Law:
Consumers should pay back the payday debt on time and in full.
The consumer should understand all the terms and conditions of the contract or loan before signing it.
Consumers should only borrow the amount of money that they are sure that they can repay fully within the agreed repayment date.
Consumer Protections and Rights For Illinois car loans :
The lender should not be charged a fee of over $15.50 per $100 borrowed
The borrower cannot borrow more than 25% of his/her gross monthly income and no one is allowed borrow more than $1000 no matter how high their income is.
One can have a maximum of only two car loans at a time
The borrower has the right to full disclosure of the annual percentage rate (APR) and all fees charged clearly stipulated in the contract.
The lender should not charge the borrower for the court charges or attorney’s fees to collect the outstanding debt.
The borrower can request a repayment plan after having an outstanding debt for more than 35 days where there are no further interest charges and any other type of fees
The lender should not take an interest in the borrowers’ personal property
There is additional protection to members of the military
A lender can only sue the borrower if the borrower has not repaid the debt 28 days after the repayment plan expired or the loan was due.
installment loan rollover is prohibited
The borrower is allowed to cancel a wage assignment by contacting the lender
The Illinois Installment Loan Reform Act :
The borrower is allowed to cancel an installment loan without any interest or fee charges if he or she cancels the loan before the end of the second working/business day.
This means that borrower will need to do cancelation a day after the installment loan has been activated. Additionally, to cancel future obligations, the borrower will be required to submit a written cancellation to the lender and also will be required to pay an amount equivalent to the loan’s principal amount.
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