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What is the maximum late fee we can charge on a consumer (non-real-estate) loan in Illinois? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

What is the maximum late fee we can charge on a consumer (non-real-estate) loan in Illinois?

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There are very few limitations on late fees under Illinois law for consumer loans, provided that your customers have agreed to such fees in the loan agreements.

The Illinois Banking Act permits banks to charge fees, interest and other charges, provided that the bank sets these charges based on its “prudent business judgment and safe and sound operating standards.” Additionally, the Interest Act authorizes a bank to collect interest and charges at any rate agreed on by the bank and the borrower.

For resources related to our guidance, please see below:

  • Illinois Banking Act, 205 ILCS 5/5e (“Notwithstanding the provisions of any other law in connection with extensions of credit,” banks may charge “interest, fees, and other charges . . . 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 . . . 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. . . .”)