CONSUMER & PREDATORY LOANS
SB1853 would amend Illinois’s Consumer Installment Loan Act and Predatory Loan Prevention Act to change how annual percentage rates are calculated, replacing the current reference to a military APR methodology with the federal Truth in Lending Act/Regulation Z calculation method. The bill keeps the existing 36% plus Federal Funds Rate cap structure for covered consumer installment loans and predatory loans, but standardizes the APR calculation method used to apply those caps.
The bill also adds borrower protections in the Consumer Installment Loan Act. It would prohibit lenders from charging any prepayment penalty, require lenders to offer a credit education program or seminar before disbursing loan proceeds, and set minimum content standards for those educational offerings. It also makes related changes to disclosure rules and maximum loan term/amount provisions, while preserving existing rules on loan structure, delinquency charges, and other permitted fees.
On the reporting side, the bill expands the consumer reporting requirements for licensees. Beginning January 1, 2026, lenders would have to report borrower payment performance to at least one nationwide consumer reporting agency and enter loan information into the state’s certified database for title-secured loans, following Department rules. The bill also requires lenders to obtain approval to report and to offer approved credit education programs at no cost to borrowers, though borrowers cannot be required to participate as a condition of receiving a loan.
In the Predatory Loan Prevention Act, SB1853 updates the purpose and construction language to emphasize consumer protection and liberal construction of the law, while also changing the APR calculation method used for the rate cap. The bill appears to be an immediate-effective-date consumer lending reform measure aimed at tightening transparency and borrower protections in high-cost lending markets.
Overall sentiment in the available record is neutral to supportive of consumer protection goals, but there is no committee transcript or voting history provided to show debate or formal opposition. The main points of potential contention are the added compliance obligations for lenders, including mandatory credit education offers, reporting requirements, and the administrative burden of using the Truth in Lending Act APR calculation standard instead of the prior military APR reference. Because no votes or hearing remarks are available, no specific stakeholder positions can be confirmed from the record.
SB1853 would amend 205 ILCS 670 (Consumer Installment Loan Act) and 815 ILCS 123 (Predatory Loan Prevention Act). It would change the statutory APR calculation method used for rate caps and disclosures, prohibit prepayment penalties, require lenders to offer credit education before loan disbursement, and expand reporting obligations to consumer reporting agencies and the state’s certified database. These changes would directly affect licensed consumer installment lenders, title-secured loan lenders, borrowers, and the Illinois Department of Financial and Professional Regulation.
No committee transcripts or votes are available, so the record does not show formal support or opposition. Based on the bill text, the measure is framed as consumer-protection legislation and appears intended to strengthen borrower safeguards, increase transparency, and improve credit reporting. The overall tone is consistent with a reform-oriented approach to consumer and predatory lending.
The likely areas of contention are the bill’s operational and compliance requirements for lenders. Lenders may object to the mandatory offer of credit education programs, the prohibition on prepayment penalties, and the new reporting and database obligations, which could increase administrative costs and change loan servicing practices. Consumer advocates would likely support these provisions as protections against high-cost lending and opaque loan terms, but no direct stakeholder testimony is provided in the record.