Payday loans may still be available in Illinois, but a new law prevents payday lenders from charging more than a 36% APR for the loan. So while you may be able to get a loan with the structure and repayment period of a payday loan, the high interest rates have been banned.
The current new law states that lenders can only offer $1000 or 25% of a borrower’s gross monthly income. It also says that the minimum repayment period is 13 days and the maximum is 45 days. So while you could still consider this a payday loan if you’re repaying through one lump sum on your payday, it won’t carry the high costs typical of payday lending.
Payday loans have long been the target of scrutiny for their extremely high APRs as well as short repayment periods. These two things combined can make them quite difficult to repay on time. And many payday lenders rely on borrowers to default so they can charge additional fees and interest to add a new loan term to the agreement. This is a practice referred to as “rollover.” The new Predatory Loan Prevention Act has also banned loan rollover.
The best way to protect yourself with a payday loan, or any loan for that matter, is to thoroughly research the loan and lender in question. Ask questions, read online reviews, call the lender to find out more information. The more you know about the loan product, and the lender, the less likely you are to be taken advantage of. And the less likely you’ll be to default on the loan, since you already know what to expect.
If you’re in the market for a quick cash loan, personal installment loans are often considered a safer and more affordable option. The interest rates tend to be lower than typical payday loans, and they offer longer repayment terms as well.