This afternoon, the Division of Financial Institutions within the Illinois Department of Financial and Professional Regulation (IDFPR) issued Frequently Asked Questions guidance on the Predatory Loan Prevention Act (PLPA), which took effect on March 23, 2021. Click here for LINK TO GUIDANCE.

The PLPA impacts motor vehicle retail installment contracts by imposing an interest rate cap of 36% Military APR (MAPR) as defined under the Military Lending Act.  

Military APR, also known as "All-In APR", reclassifies certain fees as part of the finance charge.  Under the revised guidance the following fees are to be added to the finance charge:

• Credit Insurance Fee
• GAP Waiver Fee
• Consumer Credit Application Fees; and
• "Credit-related ancillary product" fees (undefined)

The term "credit-related ancillary product" is not defined, but potentially includes the fee for an extended service contract and the amount of any cash out financing.  IADA takes the position that an extended service contract is not a "credit-related ancillary product" because extended service contracts are offered to cash and credit customers, but we are still trying to get IDFPR to confirm.  Cash-out financing is less clear, but again we are trying to get IDFPR to make a determination that cash-out financing is not a credit-related product. We will update you if IDFPR responds to our request for clarification.

IADA supports legislation that would cap the interest rate in motor vehicle retail installment contracts at 36% APR as defined in the 50-year-old definition under the federal Truth-in-Lending Act. 

Please feel fee to contact IADA with any questions at 217-753-0220 or ldoll@illinoisdealers.com.