The PLPA imposes an interest rate cap of 36% APR. The PLPA replaces the traditional Truth-in-Lending Act (TILA) definition of APR (enacted in 1968) with the Military APR as defined in the Military Lending Act (MLA). Using Military APR distorts the calculation of the "amount financed" in a retail installment contract and complicates motor vehicle transactions for motor vehicle dealers, lenders, and customers. While the amount financed in a retail installment contract is clearly defined in TILA, regulators are unable to agree on whether fees for GAP waivers, credit insurance, or service contracts should be included in the amount financed under the MLA. There is similar confusion about whether cash-out financing is included in the MLA definition of amount financed.
If Governor Pritzker signs SB1792 into law, dealers will be put into a compliance trick bag. Dealers will have to stop offering products and services that are of value to many of their customers or risk violating the PLPA.
Please contact Governor Pritzker and urge him to veto Senate Bill 1792 so that IADA and other interested parties can craft legislation that will protect consumers from predatory lending practices without impairing access to products that benefit consumers and without creating a compliance trap for motor vehicle dealers and lenders.
