There has been new regulation that will take in effect on April 1 2009, for title loans in Illinois.
- A $4,000 limit on car title loans.
- Restrictions on loans of any amount that would result in monthly payments exceeding 50 percent of the consumers' gross monthly income.
- It will be prohibited for lenders to give loans with balloon payments, thus allowing consumers to repay the loan in equal installments - much like traditional car loans.
- Car title loans can be refinanced, but only if the principal on the loan has been paid down by at least 20 percent.
- Illinois title loans that are refinanced cannot exceed the total outstanding on the original loan.
- The state of Illinois will create a statewide database of current title loans. This is an effort to enforce the above regulations.
- Title loan companies operating in Illinois will be enforced to provide consumers with pamphlets from the Illinois Department of Financial and Professional Regulation outlining options for debt management as well as debtors' rights and responsibilities.
California existing regulations.
- Above $2,500 the rate cap is exempt. Essentially, it's what the lender and borrower agree on.
- Customer must show ability to pay.
- Fully amortized loans.
- Maximum $75 loan processing fee for loans up to $5000, no maximum for loans above.
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