Money & Debt

Payday loans are short-term consumer loans in which the amount borrowed and fees due are typically on the borrower’s next payday. The Predatory Loan Prevention Act caps the interest on payday loans to 36% annual percentage rate (APR). Payday loans after March 23, 2021 with an APR higher than 36% are void and don't have to be repaid. The maximum amount of a payday loan is $1,000 or 25% of the borrower’s gross monthly income, whichever is less. Payday loans must not result in being in debt for more than 45 days.

The Payday Loan Reform Act also provides protections. Under Illinois law, you are entitled to enter into an interest-free repayment plan with your lender after you’ve been in debt for more than 35 days. The repayment plan gives 55 days minimum to repay the loan in installments with no additional finance charges, interest fees, or other charges. 

Payday loan companies target people who are desperate, especially the working poor and elderly on social security. They look for people who need money so badly that it is hard to say no to unfair loan terms. 

You should avoid taking out a payday loan if possible. If you need a loan, try a credit union, or see if a friend or relative can help. If you do enter into a payday loan, you can cancel it and pay no interest charges if you pay it off in full within two business days.

Illinois law does not allow a payday loan "rollover." This means the lender cannot extend the term of the loan, refinance, or renew the loan. If a lender does this, you should speak to a consumer advocate and report it to the Office of the Illinois Attorney General.