Generally, there are very few limitations on interest rates charged by banks under Illinois law for consumer loans made to borrowers who are not active duty servicemembers or their dependents. Of course, any interest rates and fees must be agreed to by your customers in your loan agreements, and some other limitations will apply only in certain situations, such as post-judgment interest rate limits.

The Illinois Banking Act permits banks to charge fees, interest and other charges on loans based on their “prudent business judgment and safe and sound operating standards.” The Interest Act further authorizes a bank to collect interest and charges at any rate agreed upon by the bank and the borrower.

If a bank sues a debtor and obtains a judgment, the Illinois Code of Civil Procedure generally limits the interest rate charged after judgment to 9%. Note that there is legislation currently pending in the Illinois General Assembly which appears likely to pass that would lower the post-judgment interest rate on consumer debt judgments of $25,000 or less to 5%.

For resources related to our guidance, please see:

• Illinois Banking Act, 205 ILCS 5/5e (“Notwithstanding the provisions of any other law in connection with extensions of credit, a State bank may elect to contract for and receive interest, fees, and other charges for extensions of credit subject only to the provisions of subsection (1) of Section 4 of the Interest Act” and the laws applicable to real estate loans, provided that the bank sets fees based on its “prudent business judgment and safe and sound operating standards.”)

• Interest Act, 815 ILCS 205/4(1) (“It is lawful for a state bank or a branch of an out-of-state bank, as those terms are defined in Section 2 of the Illinois Banking Act, to receive or to contract to receive and collect interest and charges at any rate or rates agreed upon by the bank or branch and the borrower.”)

• Illinois Financial Services Development Act, 205 ILCS 675/4 (“Notwithstanding the provisions of any other laws in connection with revolving credit plans, any financial institution may, subject to the other provisions of this Section 4 offer and extend credit under a revolving credit plan to a borrower and in connection therewith may charge and collect interest and other charges, may take real and personal property as security therefor and may provide in the agreement governing the revolving credit plan for such other terms and conditions as the financial institution and borrower may agree upon from time to time.”)

• Illinois Code of Civil Procedure, 735 ILCS 5/2-1303 (“Judgments recovered in any court shall draw interest at the rate of 9% per annum from the date of the judgment until satisfied . . . .”)

• House Bill 88, 101st General Assembly (“Notwithstanding subsection (a), consumer debt judgments of $25,000 or less shall draw interest from the date of the judgment until satisfied at the rate of 5% per annum.”)