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91_SR0042enr 91SR0042 Enrolled 1 STATE OF ILLINOIS 2 NINETY-FIRST GENERAL ASSEMBLY 3 SENATE 4 Senate Resolution No. 42 5 Offered by Senators O'Malley, Hawkinson and Lightford 6 WHEREAS, The granting of credit is a matter that is of 7 economic importance to the citizens of this State and of 8 concern to the Senate; and 9 WHEREAS, It has come to the attention of the Members of 10 this Body that certain lenders are charging fees and interest 11 on short-term loans that result in annual percentage rates in 12 excess of 300%; and 13 WHEREAS, The imposition of exceedingly high interest 14 rates creates financial burdens on persons who must borrow 15 on a short-term basis; and 16 WHEREAS, Borrowers who take out short-term loans may 17 constitute a captive market for lenders who charge high rates 18 of interest; and 19 WHEREAS, Some of these short-term loans, commonly called 20 "payday loans", typically require the borrower to give the 21 lender, at the time of the loan, a postdated check in an 22 amount sufficient to pay the loan; and 23 WHEREAS, Other short-term loans, commonly called "title 24 loans", typically require the borrower to give the lender an 25 authorization to transfer the title to or a lien upon the 26 title to a motor vehicle owned by the borrower at the time 27 the loan is made; and 28 WHEREAS, Additional information about the practices of 29 lenders who make payday loans or title loans is necessary to 30 enable the Senate to determine if additional regulation of 31 this business is necessary; therefore, be it 91SR0042 Enrolled -2- 1 RESOLVED, BY THE SENATE OF THE NINETY-FIRST GENERAL 2 ASSEMBLY OF THE STATE OF ILLINOIS, that the Department of 3 Financial Institutions is directed to conduct a study of the 4 business of making payday loans and title loans; and be it 5 further 6 RESOLVED, That the study include a determination of the 7 number and locations of entities engaged in the payday loan 8 or title loan business, information on the annual percentage 9 rate of interest and other charges imposed upon borrowers who 10 receive payday loans and title loans, and a profile of the 11 borrowers who take out payday loans and title loans; and be 12 it further 13 RESOLVED, That the study determine whether persons who 14 take out payday loans and title loans constitute a captive 15 market for lenders, whether the rates and fees charged are 16 excessive, and whether the lenders engage in "sharp" loan 17 practices; and be it further 18 RESOLVED, That the study include a discussion of problems 19 payday loan and title loan practices cause for borrowers and 20 consumers in general; and be it further 21 RESOLVED, That the Department of Financial Institutions 22 report its findings and recommendations to the Senate by 23 September 15, 1999; and be it further 24 RESOLVED, That a copy of this resolution be delivered to 25 the Director of Financial Institutions. 26 Adopted by the Senate, March 23, 1999. 27 _______________________ _______________________ 28 Secretary of the Senate President of the Senate