TITLE 38: FINANCIAL INSTITUTIONS
CHAPTER I: DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION
PART 110 CONSUMER INSTALLMENT LOAN ACT
SECTION 110.100 FINANCE CHARGES REBATES AND DELINQUENCY CHARGES
Section 110.100 Finance Charges – Rebates and Delinquency Charges
a) Computation of Finance Charge
1) On loans other than Small Consumer Loans on which monthly installment account handling charges are charged, charges may be computed on the original face amount of the loan contract for the full term of the loan contract.
2) Monthly installment account handling charges on Small Consumer Loans may be computed on the original amount financed under the loan contract for the full term of the loan contract at the permitted monthly installment account handling charge. Small Consumer Loans upon which monthly installment account handling charges are precomputed in this manner are deemed to be precomputed loans for all purposes unless otherwise specified by the Act.
3) The maximum charge so computed (or any lesser amount) may be added to the original principal amount of the loan or may be deducted from the face amount of the contract when the loan is made.
b) A standard payment schedule is one under which a loan is repayable in substantially equal and consecutive weekly, biweekly, semimonthly, or monthly installments of principal and charges combined, and the first installment is due one weekly, biweekly, semimonthly, or monthly period from the date of the note, except as provided in subsections (b)(1), (2) and (3).
1) The loan contract shall be drawn to reflect a standard payment schedule with payments to be made on a weekly, biweekly, semimonthly, or monthly basis, except that the first installment period may exceed one weekly, biweekly, semimonthly, or monthly period by as much as the following:
A) For weekly payments, by 4 days;
B) For biweekly and semimonthly payments, by 7 days;
C) For monthly payments, by 15 days.
2) If a charge is made for extra days in the first installment period it may be added to the first installment payment. The interest for such period may be increased by 1/30 of the agreed monthly rate for each extra day. A charge for extra days in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.
3) If the first installment period is less than one month the loan charge shall be reduced by 1/30 of the agreed monthly rate for each day that the first installment period is less than one month, and the amount of the first installment shall be reduced by the same amount. Such adjustment in the first installment period does not change the amount of rebate required for prepayment in full on or after the first installment date.
c) The obligor shall have the right to prepay a loan in full on any installment due date. When prepayment in full occurs on a date other than a scheduled installment due date, the rebate may be computed as of the next following scheduled installment due date.
d) When the contract is renewed or refinanced before maturity, or judgment is obtained before maturity, the same rebate is required as for prepayment in full.
e) Rebate of Finance Charge
1) The Rule of 78 shall be the method of rebating precomputed contracts other than Small Consumer Loans. The rebate shall be that proportion of the original charge for the loan that the sum of the monthly balances scheduled to follow the prepayment in full bears to the sum of all the monthly balances, both sums to be determined according to the originally contracted payment schedule. The required rebate is a fraction (or percentage) of the precomputed interest charge. The fraction differs for each number of months that the contract is prepaid in full.
2) The unearned interest or unearned portion of the monthly installment account handling charge that is refunded shall be calculated based on a method that is at least as favorable to the consumer as the actuarial method, defined by the federal Truth in Lending Act (15 USC 1601 et seq.) and Regulation Z, Appendix J (12 CFR 226 (2011); this incorporation by reference includes no subsequent dates or editions). The Department will post on its website a method of rebate calculation that conforms with Appendix J. Licensees may submit to the Department requests for approval of additional methods of rebate calculation that conform to Appendix J. All methods approved by the Department will be posted on the Department's website. The Department shall make its best efforts to respond to all licensee requests for use of a method. The use of any posted method will constitute compliance with the requirements of this subsection (e)(2). The sum of the digits method and Rule of 78 method of calculating prepaid interest refunds are prohibited.
f) When a precomputed interest loan contract is renewed or refinanced, accrued but uncollected interest may be included in the principal amount of the new loan contract.
g) Delinquency or Default Charges
1) All delinquency charges (Default Charges) shall comply with the requirements and provisions of the applicable statute under which the contract was made.
2) Delinquency charges may be assessed and collected and added to the balance of the note, but interest shall not be collected on said charge.
3) Earned, but uncollected, delinquency charges shall be recorded on the account record on the date the delinquent payment is received, if the licensee intends to collect the charges at a later date.
h) If two or more installments are delinquent on any installment date the contract balance may be reduced as of that date by the rebate that would be required for prepayment in full on that date. Thereafter, the agreed contractual rate may be charged on the actual unpaid balances of the loan contract until the contract is fully paid or, in the case of Small Consumer Loans, interest at the rate of 18% per annum may be charged in the unpaid balance until fully paid. Interest so received shall be in lieu of the rebated charges and any delinquency charge that would otherwise accrue after the date of which the rebate was made.
i) When a contract is prepaid in full, a statement or receipt shall be given to the obligor, showing the date of prepayment, the amount of the rebate, if any, and the amount paid to discharge the loan.
j) Fifteen days after the expiration date of the loan contract, interest may be charged at the contractually agreed rate, not to exceed the rate permitted in Section 15 of the Act or, in the case of precomputed Small Consumer Loans, interest at the rate of 18% per annum, on any balance remaining unpaid. At the time of final payment the licensee shall notify the obligor of the balance unpaid.
1) The maximum amount that may be charged for a one month's deferment is equal to the difference between the rebate that would be required for prepayment in full as of the scheduled due date of the deferred installment and the rebate that would be required for prepayment in full as of one month prior to the due date.
2) On a precomputed loan the rebate for prepayment in full after deferment interest has been charged shall be larger than the rebate that otherwise would be required.
3) If a rebate is required one month or more before the deferred due date of the first deferred installment, the licensee, at its option, may make a separate rebate of deferment interest for each unexpired month of the deferment period and then rebate the standard precomputed finance charge for the number of months to the original final installment date, plus one month for each month that deferment is retained.
(Source: Amended at 35 Ill. Reg. 7319, effective April 21, 2011)