Illinois Imposes 36% Rate Cap

On March 23, 2021, Illinois Governor JB Pritzker signed into law Senate Bill 1792, enacting the Predatory Loan Prevention Act (PLPA) and capping interest at an “all-in” 36% APR (similar to the Military Lending Act’s MAPR) for a variety of consumer financing, effective immediately. The PLPA uses an expansive definition of interest, applies to a wide array of businesses, and voids any contract that exceeds the cap. Companies providing consumer financing in Illinois and secondary market purchasers should review their business practices and ensure that their financing arrangements do not violate the PLPA. We describe the requirements of the PLPA, discuss the transactions and entities subject to (and exempt from) the legislation, consider “true lender” and Madden implications, identify particular products affected, and set out penalties for violations in Mayer Brown’s Legal Update.