Topic: Late Fees
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Is there an Illinois law that specifies a maximum percentage or dollar amount for a late charge that can be charged on a consumer loan if the loan payment is above or below $200 per month?
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No, we do not believe that Illinois law limits the late fees and charges that your bank may impose, provided that your customer has agreed to the late fees and charges. The Illinois Interest Act limits delinquency and collection charges for installment loans, providing that such charges may not exceed “5% of the installment on…
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Is there a maximum late fee or default rate that we can charge non-consumer loan customers? Also, are we required to send non-consumer loan customers notice when there is a change in the interest rate due to a default?
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There are very few limitations on loan late fees and default interest rates under Illinois law, whether for consumer or commercial loans, provided that your customers have agreed to such fees and rates in your loan agreements. However, default rates may be subject to court scrutiny if they are not considered “reasonable.” Further, we are…
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Our bank has a customer making payments on a Chapter 13 bankruptcy plan. The bank’s claim is related to an auto loan, and the Chapter 13 trustee has indicated that the secured portion of the claim has been paid in full. The trustee is distributing the customer’s plan payments among the unsecured creditors, and the amount the bank is receiving is insufficient to cover the customer’s monthly loan payment. Can we assess late charges on the loan?
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No, we do not believe your bank can assess late fees, even though such fees may be allowed by the terms of the loan agreement, because your bank’s claim is “undersecured,” meaning the value of the collateral (the vehicle securing the loan) is less than the value of your bank’s claim (the unpaid loan amount).…
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For the state of Illinois, is there a maximum late fee that we can charge for late loan payments?
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There are very few limitations on loan late fees under Illinois law, provided that your customers have agreed to such fees in the loan agreements. The Illinois Financial Services Development Act authorizes late fees on revolving credit plans (such as HELOCs) without any specific limit. Financial institutions may set the fee amount in their plan…
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Are there any limitations in Illinois on late fees for a home equity line of credit (HELOC) or for first or second lien real estate mortgages? Is there a required grace period before we can charge late fees?
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There are very few limitations on loan late fees under Illinois law, provided that your customers have agreed to such fees in the loan agreements. The Illinois Financial Services Development Act authorizes late fees on revolving credit plans (such as HELOCs) without any specific limit. Financial institutions may set the fee amount in their plan…
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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…
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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…
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Under Illinois law, is the grace period on a home equity line of credit (HELOC) 10 or 15 days before we can impose a late fee?
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Illinois law does not impose a specific “grace period” on revolving credit plans (such as HELOCs). The Illinois Financial Services Development Act authorizes financial institutions to establish grace periods, late fees, and other terms and conditions in their plan agreements with their borrowers. For resources related to our guidance, please see: Illinois Financial Services Development…
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Under Illinois law, can we set a minimum late fee amount on consumer loans, such as vehicle loans and unsecured loans?
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Yes, it is permissible to establish a minimum late fee on consumer loans, including vehicle loans and unsecured loans, provided that the customer contracted to pay the fee in your loan agreement. Under Illinois law, there are very few limitations on interest rates and fees charged by banks, whether on commercial or consumer loans. The…
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Does Illinois law permit $15 fees for late payments on a Home Equity Line of Credit (HELOC)? What about for a closed-end home equity loan?
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A $15 late fee on a HELOC payment is permitted in Illinois. The Illinois Financial Services Development Act authorizes late fees on revolving credit plans (such as HELOCs) without any specific limit. Financial institutions may set the fee amount in their plan agreements with their borrowers. Regarding closed-end home equity loans, the Illinois Banking Act…