(815 ILCS 205/0.01) (from Ch. 17,
par. 6400)
Sec. 0.01. Short title. This Act
may be cited as the Interest Act.
(Source: P.A. 86-1324.)
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(815 ILCS 205/1) (from Ch. 17,
par. 6401)
Sec. 1. The rate of interest upon
the loan or forbearance of any money, goods or thing in action,
shall be five dollars ($5) upon one hundred dollars ($100)
for one year, and after that rate for a greater or less sum,
or for a longer or shorter time, except as herein provided.
(Source: Laws 1891, p. 149.)
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(815 ILCS 205/2) (from Ch. 17,
par. 6402)
Sec. 2. Creditors shall be allowed
to receive at the rate of five (5) per centum per annum for
all moneys after they become due on any bond, bill, promissory
note, or other instrument of writing; on money lent or advanced
for the use of another; on money due on the settlement of account
from the day of liquidating accounts between the parties and
ascertaining the balance; on money received to the use of another
and retained without the owner's knowledge; and on money withheld
by an unreasonable and vexatious delay of payment. In the absence
of an agreement between the creditor and debtor governing interest
charges, upon 30 days' written notice to the debtor, an assignee
or agent of the creditor may charge and collect interest as
provided in this Section on behalf of a creditor.
(Source: P.A. 90-417, eff. 1-1-98.)
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(815 ILCS 205/4) (from Ch. 17,
par. 6404)
Sec. 4. General interest rate.
(1) In all written contracts it
shall be lawful for the parties to stipulate or agree that
9% per annum, or any less sum of interest, shall be taken and
paid upon every $100 of money loaned or in any manner due and
owing from any person to any other person or corporation in
this state, and after that rate for a greater or less sum,
or for a longer or shorter time, except as herein provided.
The maximum rate of interest that
may lawfully be contracted for is determined by the law applicable
thereto at the time the contract is made. Any provision in any
contract, whether made before or after July 1, 1969, which provides
for or purports to authorize, contingent upon a change in the
Illinois law after the contract is made, any rate of interest
greater than the maximum lawful rate at the time the contract
is made, is void.
It is lawful for a state bank or
a branch of an out-of-state bank, as those terms
are defined in Section 2 of the Illinois Banking Act, 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.
It is lawful for a savings bank chartered under the Savings Bank
Act or a savings association chartered under the Illinois Savings
and Loan Act of 1985 to receive or contract to receive and collect
interest and charges at any rate agreed upon by the savings bank
or savings association and the borrower.
It is lawful to receive or to contract
to receive and collect interest and charges as authorized by
this Act and as authorized by the Consumer Installment Loan Act
and by the "Consumer Finance Act", approved July 10, 1935,
as now or hereafter amended. It is lawful to charge, contract
for, and receive any rate or amount of interest or compensation
with respect to the following transactions:
(a) Any
loan made to a corporation;
(b) Advances
of money, repayable on demand, to an
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amount not less than $5,000, which are
made upon warehouse receipts, bills of lading,
certificates of stock, certificates of deposit,
bills of exchange, bonds or other negotiable instruments
pledged as collateral security for such repayment,
if evidenced by a writing;
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(c)
Any credit transaction between a merchandise
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wholesaler and retailer; any business
loan to a business association or copartnership
or to a person owning and operating a business
as sole proprietor or to any persons owning and
operating a business as joint venturers, joint
tenants or tenants in common, or to any limited
partnership, or to any trustee owning and operating
a business or whose beneficiaries own and operate
a business, except that any loan which is secured
(1) by an assignment of an individual obligor's
salary, wages, commissions or other compensation
for services, or (2) by his household furniture
or other goods used for his personal, family or
household purposes shall be deemed not to be a
loan within the meaning of this subsection; and
provided further that a loan which otherwise qualifies
as a business loan within the meaning of this subsection
shall not be deemed as not so qualifying because
of the inclusion, with other security consisting
of business assets of any such obligor, of real
estate occupied by an individual obligor solely
as his residence. The term "business" shall
be deemed to mean a commercial, agricultural or
industrial enterprise which is carried on for the
purpose of investment or profit, but shall not
be deemed to mean the ownership or maintenance
of real estate occupied by an individual obligor
solely as his residence;
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(d)
Any loan made in accordance with the provisions
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of Subchapter I of Chapter 13 of Title
12 of the United States Code, which is designated
as "Housing Renovation and Modernization";
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(e)
Any mortgage loan insured or upon which a
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commitment to insure has been issued
under the provisions of the National Housing Act,
Chapter 13 of Title 12 of the United States Code;
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(f)
Any mortgage loan guaranteed or upon which a
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commitment to guaranty has been issued
under the provisions of the Veterans' Benefits
Act, Subchapter II of Chapter 37 of Title 38 of
the United States Code;
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(g)
Interest charged by a broker or dealer
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registered under the Securities Exchange
Act of 1934, as amended, or registered under the
Illinois Securities Law of 1953, approved July
13, 1953, as now or hereafter amended, on a debit
balance in an account for a customer if such debit
balance is payable at will without penalty and
is secured by securities as defined in Uniform
Commercial Code-Investment Securities;
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(h)
Any loan made by a participating bank as part of
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any loan guarantee program which provides
for loans and for the refinancing of such loans
to medical students, interns and residents and
which are guaranteed by the American Medical Association
Education and Research Foundation;
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(i)
Any loan made, guaranteed, or insured in
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accordance with the provisions of the
Housing Act of 1949, Subchapter III of Chapter
8A of Title 42 of the United States Code and the
Consolidated Farm and Rural Development Act, Subchapters
I, II, and III of Chapter 50 of Title 7 of the
United States Code;
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(j)
Any loan by an employee pension benefit plan, as
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defined in Section 3 (2) of the Employee
Retirement Income Security Act of 1974 (29 U.S.C.A.
Sec. 1002), to an individual participating in such
plan, provided that such loan satisfies the prohibited
transaction exemption requirements of Section 408
(b) (1) (29 U.S.C.A. Sec. 1108 (b) (1)) or Section
2003 (a) (26 U.S.C.A. Sec. 4975 (d) (1)) of the
Employee Retirement Income Security Act of 1974;
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(k)
Written contracts, agreements or bonds for deed
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providing for installment purchase of
real estate;
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(1)
Loans secured by a mortgage on real estate;
(m) Loans
made by a sole proprietorship,
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partnership, or corporation to an employee
or to a person who has been offered employment
by such sole proprietorship, partnership, or corporation
made for the sole purpose of transferring an employee
or person who has been offered employment to another
office maintained and operated by the same sole
proprietorship, partnership, or corporation;
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(n)
Loans to or for the benefit of students made by
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an institution of higher education.
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(2) Except for
loans described in subparagraph (a), (c), (d), (e), (f)
or (i) of subsection (1) of this Section, and except to
the extent permitted by the applicable statute for loans
made pursuant to Section 4a or pursuant to the Consumer
Installment Loan Act:
(a) Whenever
the rate of interest exceeds 8% per
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annum on any written contract, agreement
or bond for deed providing for the installment
purchase of residential real estate, or on any
loan secured by a mortgage on residential real
estate, it shall be unlawful to provide for a prepayment
penalty or other charge for prepayment.
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(b)
No agreement, note or other instrument
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evidencing a loan secured by a mortgage
on residential real estate, or written contract,
agreement or bond for deed providing for the installment
purchase of residential real estate, may provide
for any change in the contract rate of interest
during the term thereof. However, if the Congress
of the United States or any federal agency authorizes
any class of lender to enter, within limitations,
into mortgage contracts or written contracts, agreements
or bonds for deed in which the rate of interest
may be changed during the term of the contract,
any person, firm, corporation or other entity not
otherwise prohibited from entering into mortgage
contracts or written contracts, agreements or bonds
for deed in Illinois may enter into mortgage contracts
or written contracts, agreements or bonds for deed
in which the rate of interest may be changed during
the term of the contract, within the same limitations.
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(3) In any contract
or loan which is secured by a mortgage, deed of trust,
or conveyance in the nature of a mortgage, on residential
real estate, the interest which is computed, calculated,
charged, or collected pursuant to such contract or loan,
or pursuant to any regulation or rule promulgated pursuant
to this Act, may not be computed, calculated, charged or
collected for any period of time occurring after the date
on which the total indebtedness, with the exception of
late payment penalties, is paid in full.
For purposes of this Section, a
prepayment shall mean the payment of the total indebtedness, with
the exception of late payment penalties if incurred or charged,
on any date before the date specified in the contract or loan agreement
on which the total indebtedness shall be paid in full, or before
the date on which all payments, if timely made, shall have been
made. In the event of a prepayment of the indebtedness which is
made on a date after the date on which interest on the indebtedness
was last computed, calculated, charged, or collected but before
the next date on which interest on the indebtedness was to be calculated,
computed, charged, or collected, the lender may calculate, charge
and collect interest on the indebtedness for the period which elapsed
between the date on which the prepayment is made and the date on
which interest on the indebtedness was last computed, calculated,
charged or collected at a rate equal to 1/360 of the annual rate
for each day which so elapsed, which rate shall be applied to the
indebtedness outstanding as of the date of prepayment. The lender
shall refund to the borrower any interest charged or collected
which exceeds that which the lender may charge or collect pursuant
to the preceding sentence. The provisions of this amendatory Act
of 1985 shall apply only to contracts or loans entered into on
or after the effective date of this amendatory Act, but shall not
apply to contracts or loans entered into on or after that date
that are subject to Section 4a of this Act, the Consumer Installment
Loan Act, or the Retail Installment Sales Act, or that provide
for the refund of precomputed interest on prepayment in the manner
provided by such Act.
(Source: P.A. 92-483, eff. 8-23-01.)
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(815 ILCS 205/4.1) (from
Ch. 17, par. 6405)
Sec. 4.1. The term "revolving
credit" means an arrangement, including by means of a credit
card as defined in Section 2.03 of the Illinois Credit Card Act
between a lender and debtor pursuant to which it is contemplated
or provided that the lender may from time to time make loans
or advances to or for the account of the debtor through the means
of drafts, items, orders for the payment of money, evidences
of debt or similar written instruments, whether or not negotiable,
signed by the debtor or by any person authorized or permitted
so to do on behalf of the debtor, which loans or advances are
charged to an account in respect of which account the lender
is to render bills or statements to the debtor at regular intervals
(hereinafter sometimes referred to as the "billing cycle")
the amount of which bills or statements is payable by and due
from the debtor on a specified date stated in such bill or statement
or at the debtor's option, may be payable by the debtor in installments.
A revolving credit arrangement which grants the debtor a line
of credit in excess of $5,000 may include provisions granting
the lender a security interest in real property or in a beneficial
interest in a land trust to secure amounts of credit extended
by the lender. Credit extended or available under a revolving
credit plan operated in accordance with the Illinois Financial
Services Development Act shall be deemed to be "revolving
credit" as defined in this Section 4.1 but shall not be
subject to Sections 4.1a, 4.2 or 4.3 hereof.
Whenever a lender is granted a
security interest in real property or in a beneficial interest
in a land trust, the lender shall disclose the existence of such
interest to the borrower in compliance with the Federal Truth
in Lending Act, amendments thereto, and any regulations issued
or which may be issued thereunder, and shall agree to pay all
expenses, including recording fees and otherwise, to release
any such security interest of record whenever it no longer secures
any credit under a revolving credit arrangement. A lender shall
not be granted a security interest in any real property or in
any beneficial interest in a land trust under a revolving credit
arrangement, or if any such security interest exists, such interest
shall be released, if a borrower renders payment of the total
outstanding balance due under the revolving credit arrangement
and requests in writing to reduce the line of credit below that
amount for which a security interest in real property or in a
beneficial interest in a land trust may be required by a lender.
Any request by a borrower to release a security interest under
a revolving credit arrangement shall be granted by the lender
provided the borrower renders payment of the total outstanding
balance as required by this Section before the security interest
of record may be released.
(Source: P.A. 85-1432.)
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(815 ILCS 205/4.1a) (from
Ch. 17, par. 6406)
Sec. 4.1a. Charges for and cost
of the following items paid or incurred by any lender in connection
with any loan shall not be deemed to be charges for or in connection
with any loan of money referred to in Section 6 of this Act,
or charges by the lender as a consideration for the loan referred
to in this Section:
(a) hazard,
mortgage or life insurance premiums,
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survey, credit report, title insurance,
abstract and attorneys' fees, recording charges,
escrow and appraisal fees, and similar charges.
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(b)
in the case of construction loans, in addition
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to the matters referred to in clause
(a) above, the actual cost incurred by the lender
for services for making physical inspections, processing
payouts, examining and reviewing contractors' and
subcontractors' sworn statements and waivers of
lien and the like.
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(c)
in the case of any loan made pursuant to the
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provisions of the Emergency Home Purchase
Assistance Act of 1974 (Section 313 of the National
Housing Act, Chapter B of Title 12 of the United
States Code), in addition to the matters referred
to in paragraphs (a) and (b) of this Section all
charges required or allowed by the Government National
Mortgage Association, whether designated as processing
fees, commitment fees, loss reserve and marketing
fees, discounts, origination fees or otherwise
designated.
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(d)
in the case of a single payment loan, made for a
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period of 6 months or less, a regulated
financial institution or licensed lender may contract
for and receive a maximum charge of $15 in lieu
of interest. Such charge may be collected when
the loan is made, but only one such charge may
be contracted for, received, or collected for any
such loan, including any extension or renewal thereof.
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(e)
if the agreement governing the loan so provides,
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a charge not to exceed the rate permitted
under Section 3-806 of the Uniform Commercial
Code-Commercial Paper for any check, draft
or order for the payment of money submitted in
accordance with said agreement which is unpaid
or not honored by a bank or other depository institution.
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(f)
if the agreement governing the loan so provides,
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for each loan installment in default
for a period of not less than 10 days, a charge
in an amount not in excess of 5% of such loan installment.
Only one delinquency charge may be collected on
any such loan installment regardless of the period
during which it remains in default. Payments timely
received by the lender under a written extension
or deferral agreement shall not be subject to any
delinquency charge.
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Where there is
a charge in addition to the stated rate of interest payable
directly or indirectly by the borrower and imposed directly
or indirectly by the lender as a consideration for the
loan, or for or in connection with the loan of money, whether
paid or payable by the borrower, the seller, or any other
person on behalf of the borrower to the lender or to a
third party, or for or in connection with the loan of money,
other than as hereinabove in this Section provided, whether
denominated "points," "service charge," "discount," "commission," or
otherwise, and without regard to declining balances of
principal which would result from any required or optional
amortization of the principal of the loan, the rate of
interest shall be calculated in the following manner:
The percentage of the principal
amount of the loan represented by all of such charges shall first
be computed, which in the case of a loan with an interest rate
in excess of 8% per annum secured by residential real estate, other
than loans described in paragraphs (e) and (f) of Section 4, shall
not exceed 3% of such principal amount. Said percentage shall then
be divided by the number of years and fractions thereof of the
period of the loan according to its stated maturity. The percentage
thus obtained shall then be added to the percentage of the stated
annual rate of interest.
The borrower in the case of nonexempt
loan shall have the right to prepay the loan in whole or in part
at any time, but, except as may otherwise be provided by Section
4, the lender may require payment of not more than 6 months' advance
interest on that part of the aggregate amount of all prepayments
on a loan in one year, which exceeds 20% of the original principal
amount of the loan.
(Source: P.A. 87-496.)
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(815 ILCS 205/4.2) (from
Ch. 17, par. 6407)
Sec. 4.2. Revolving credit; billing
statements; disclosures. On a revolving credit which complies
with subparagraphs (a), (b), (c), (d) and (e) of this Section
4.2, it is lawful for any bank that has its main office or, after
May 31, 1997, a branch in this State, a state or federal savings
and loan association with its main office in this State, a state
or federal credit union with its main office in this State, or
a lender licensed under the Consumer Finance Act, the Consumer
Installment Loan Act or the Sales Finance Agency Act, as such
Acts are now and hereafter amended, to receive or contract to
receive and collect interest in any amount or at any rate agreed
upon by the parties to the revolving credit arrangement. It is
lawful for any other lender to receive or contract to receive
and collect interest in an amount not in excess of 1 1/2% per
month of either the average daily unpaid balance of the principal
of the debt during the billing cycle, or of the unpaid balance
of the debt on approximately the same day of the billing cycle.
If a lender under a revolving credit arrangement notifies the
debtor at least 30 days in advance of any lawful increase in
the amount or rate of interest to be charged under the revolving
credit arrangement, and the debtor, after the effective date
of such notice, incurs new debt pursuant to the revolving credit
arrangement, the increased interest amount or rate may be applied
only to any such new debt incurred under the revolving credit
arrangement. For purposes of determining the balances to which
the increased interest rate applies, all payments and other credits
may be deemed to be applied to the balance existing prior to
the change in rate until that balance is paid in full. The face
amount of the drafts, items, orders for the payment of money,
evidences of debt, or similar written instruments received by
the lender in connection with the revolving credit, less the
amounts applicable to principal from time to time paid thereon
by the debtor, are the unpaid balance of the debt upon which
the interest is computed. If the billing cycle is not monthly,
the maximum interest rate for the billing cycle is the percentage
which bears the same relation to the monthly percentage provided
for in the preceding sentence as the number of days in the billing
cycle bears to 30. For the purposes of the foregoing computation,
a "month" is deemed to be any time of 30 consecutive
days. In addition to the interest charge provided for, it is
lawful to receive, contract for or collect a charge not exceeding
25 cents for each transaction in which a loan or advance is made
under the revolving credit or in lieu of this additional charge
an annual fee for the privilege of receiving and using the revolving
credit in an amount not exceeding $20. In addition, with respect
to revolving credit secured by an interest in real estate, it
is also lawful to receive, contract for or collect fees lawfully
paid to any public officer or agency to record, file or release
the security, and costs and disbursements actually incurred for
any title insurance, title examination, abstract of title, survey,
appraisal, escrow fees, and fees paid to a trustee in connection
with a trust deed.
(a) At or before the date a bill
or statement is first rendered to the debtor under a revolving
credit arrangement, the lender must mail or deliver to the debtor
a written description of the conditions under which a charge
for interest may be made and the method, including the rate,
of computing these interest charges. The rate of interest must
be expressed as an annual percentage rate.
(b) If during any billing cycle
any debit or credit entry is made to a debtor's revolving credit
account, and if at the end of that billing cycle there is an
unpaid balance owing to the lender from the debtor, the lender
must give to the debtor the following information within a reasonable
time after the end of the billing cycle:
(i) the
unpaid balance at the beginning of the
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(ii)
the date and amount of all loans or advances
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made during the billing cycle, which
information may be supplied by enclosing a copy
of the drafts, items, orders for the payment of
money, evidences of debt or similar written instruments
presented to the lender during the billing cycle;
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(iii)
the payments by the debtor to the lender and
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any other credits to the debtor during
the billing cycle;
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(iv)
the amount of interest and other charges, if
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any, charged to the debtor's account
during the billing cycle;
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(v)
the amount which must be currently paid by the
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debtor and the date on which that amount
must be paid in order to avoid delinquency;
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(vi)
the total amount remaining unpaid at the end of
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the billing cycle and the right of the
debtor to prepay that amount in full without penalty;
and
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(vii)
information required by (iv), (v) and (vi)
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must be set forth in type of equal size
and equal conspicuousness.
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(c) The revolving
credit arrangement may provide for the payment by the debtor
and receipt by the lender of all costs and disbursements,
including reasonable attorney's fees, incurred by the lender
in legal proceedings to collect or enforce the debt in
the event of delinquency by the debtor or in the event
of a breach of any obligation of the debtor under the arrangement.
(d) The lender under a revolving
credit arrangement may provide credit life insurance or credit
accident and health insurance, or both, with respect to the debtor
and may charge the debtor therefor. Credit life insurance and credit
accident and health insurance, and any charge therefor made to
the debtor, shall comply with Article IX 1/2 of the Illinois Insurance
Code, as now or hereafter amended, and all lawful requirements
of the Director of Insurance related thereto. This insurance is
in force with respect to each loan or advance made under a revolving
credit arrangement as soon as the loan or advance is made. The
purchase of this insurance from an agent, broker or insurer specified
by the lender may not be a condition precedent to the revolving
credit arrangement or to the making of any loan or advance thereunder.
(e) Whenever interest is contracted
for or received under this Section, no amount in addition to the
charges authorized by this Act may be directly or indirectly charged,
contracted for or received whether as interest, service charges,
costs of investigations or enforcements or otherwise.
(f) The lender under a revolving
credit arrangement must compute at year end the total amount charged
to the debtor's account during the year, including service charges,
finance charges, late charges and any other charges authorized
by this Act, and upon request must furnish such information to
the debtor within 30 days after the end of the year, or if the
account has been terminated during such year, may give such requested
information within 30 days after such termination. The lender shall
annually inform the debtor of his right to obtain such information.
(g) A lender who complies with
the federal Truth in Lending Act, amendments thereto, and any regulations
issued or which may be issued thereunder, shall be deemed to be
in compliance with the provisions of subparagraphs (a) and (b)
of this Section.
(h) Anything in this Section 4.2
to the contrary notwithstanding, if the Congress of the United
States or any federal agency authorizes any class of lenders to
enter, within limitations, into a revolving credit arrangement
secured by a mortgage or deed of trust on residential real property,
any person, firm, corporation or other entity, not otherwise prohibited
by the Congress of the United States or any federal agency from
enterin
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