Illinois Consumer Installment Loan Bond: A Comprehensive Guide
This guide provides information for insurance agents to their customers obtain Illinois Consumer Installment Loan Bonds
At a Glance:
- Lowest Cost: $375 per year or $38 per month, based on the applicant’s credit
- Bond Amount: $25,000 per licensed location
- Who Needs it: All businesses seeking to obtain a Consumer Installment Loan License in Illinois
- Purpose: To ensure the public will receive compensation for any damages should the loan company commit fraud or fail to account for all funds recieved from consumers
- Who Regulates Consumer Installment Loan Companies in Illinois: The Illinois Department of Financial and Professional Regulation
The Illinois Consumer Installment Loan Act requires all businesses who deal in consumer installment loans operating in the state to obtain a license with the Department of Financial and Professional Regulation. The Illinois legislature enacted the licensing laws and regulations to ensure that loan companies engage in ethical business practices. In order to provide financial security for the enforcement of the licensing law, consumer installment loan companies must purchase and maintain a $25,000 surety bond (per licensed location) to be eligible for licensure.
What is the Purpose of the Illinois Consumer Installment Loan Bond?
Illinois requires consumer installment loan companies to purchase a surety bond as part of the application process to obtain a business license. The bond ensures that the public will receive compensation for financial harm if the loan company violates any of the provisions set forth in the Illinois Consumer Installment Loan Act. Specifically, the bond protects consumers in the event the loan company were to commit fraud (dishonesty, ommissions etc) or fail to account for all funds recieved from consumers. In short, the bond is a type of insurance that protects the public if the loan company breaks licensing laws.
How Can an Insurance Agent Obtain an Illinois Consumer Installment Loan Surety Bond?
BondExchange makes obtaining an Illinois Consumer Installment Loan Bond easy. Simply login to your account and use our keyword search to find the “consumer” bond in our database. Don’t have a login? Gain access now and let us help you satisfy your customers’ needs. Our friendly underwriting staff is available by phone (800) 438-1162, email or chat from 7:30 AM to 7:00 PM EST to assist you.
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Is a Credit Check Required for the Illinois Consumer Installment Loan Bond?
Surety companies will run a credit check on the owners of the consumer installment loan company to determine eligibility and pricing for the Illinois Consumer Installment Loan bond. Owner’s with excellent credit and work experience can expect to receive the best rates. Owners with poor credit may be declined by some surety companies or pay higher rates. The credit check is a “soft hit”, meaning that the credit check will not affect the owner’s credit.
How Much Does the Illinois Consumer Installment Loan Bond Cost?
The Illinois Consumer Installment Loan surety bond can cost anywhere between $375 to $1,250 per year or $38 to $125 per month. Insurance companies determine the rate based on a number of factors including your customer’s credit score and experience. The chart below offers a quick reference for the approximate bond cost on a $25,000 bond requirement.
$25,000 Consumer Installment Loan Bond Cost
|Credit Score||Bond Cost (1 year)||Bond Cost (1 month)|
|650 – 799||$500||$50|
|600 – 649||$1,000||$100|
|450 – 599||$1,250||$125|
*The credit score ranges do not include other factors that may result in a change to the annual premium offered to your customers, including but not limited to, years of experience and underlying credit factors contained within the business owner’s credit report.
How Does Illinois Define “Consumer Installment Loan Company?”
The Illinois Consumer Installment Loan Act defines a consumer installment loan company as any business that makes or issues loans with an annual interest rate greater than 9%.
BondExchange now offers monthly pay-as-you-go subscriptions for surety bonds. Your customers are able to purchase their bonds on a monthly basis and cancel them anytime. Learn more here.
How do Consumer Installment Loan Companies Apply for a License in Illinois?
Consumer installment loan companies in Illinois must navigate several steps to secure their license. Below are the general guidelines, but applicants should refer to the NMLS’s application guidelines for details on the process.
License Period – The Illinois Consumer Installment Loan License expires on January 1 of each year and must be renewed before the expiration date
Step 1 – Meet the Net Worth Requirements
Applicants for the Illinois Consumer Installment Loan License must have a company net worth (assets – liabilities) of at least $30,000. Applicants must submit an audited financial statement, prepared by a CPA, verifying their net worth when submitting their license application.
Step 2 – Purchase a Surety Bond
Consumer installment loan companies must purchase and maintain a $25,000 surety bond (per licensed location)
Step 3 – Request NMLS Account
The Illinois Consumer Installment Loan License application is submitted electronically through the Nationwide Multistate Licensing System (NMLS). To submit a license application, applicants must first request to obtain an NMLS account.
Step 4 – Complete the Application
All Illinois Consumer Installment Loan License applications can be completed online through the NMLS. Applicants must complete the entire application, and submit the following items:
- Audited financial statements indicating a company net worth of at least $30,000
- The following company contacts:
- Primary company contact
- Primary consumer complaint contact
- Licensing (company’s compliance officer)
- Company business plan detailing the nature, amount, interest rate and term of loans to be made and types of security that will be taken
- Certificate of Good Standing issued by the Illinois Secretary of State
- Service of Process Form
- Authorization request for another of business activities to be conducted at the licensed location
Applicants for the Illinois Consumer Installment Loan License must pay the following fees when submitting their application:
- $750 if applying between January 1 to June 30
- $525 if applying between July 1 to December 31
How Do Illinois Consumer Installment Loan Companies Renew Their License?
Consumer installment loan companies can renew their license online through the NMLS. License holders need to simply login to their account to access their renewal application. The Illinois Consumer Installment Loan License expires on January 1 of each year and must be renewed before the expiration date.
What Are the Insurance Requirements for the Illinois Consumer Installment Loan License?
The State of Illinois does not require consumer installment loan companies to obtain any form of liability insurance as a prerequisite to obtaining a business license. Consumer installment loan companies must purchase and maintain a $25,000 surety bond (per licensed location).
How Do Illinois Consumer Installment Loan Companies File Their Bond ?
Loan companies should mail the completed bond form, including the power of attorney, to the following address:
Illinois Department of Financial and Professional Regulation
320 W Washington St #3
Springfield, IL 62786
The consumer installment loan surety bond requires signatures from both the surety company that issues the bond and a representative from the consumer installment loan company. The surety company should include the following information on the bond form:
- Legal name and address of entity/individual(s) buying the bond
- Surety company’s name
- Bond amount
- Date the bond is signed
What Can Illinois Consumer Installment Loan Companies Do to Avoid Claims Against Their Bond?
In order to avoid claims made against their bond, consumer installment loan companies in Illinois must follow all license regulations in the state. Including some of the most important issues below that tend to cause claims:
- Properly account for all funds received from consumers
- Do not engage in any acts of fraud
What Other Insurance Products Can Agents Offer Consumer Installment Loan Companies in Illinois?
Illinois does not require consumer installment loan companies to purchase any form of liability insurance as a prerequisite to obtaining a license. However, most reputable businesses will seek to obtain this insurance anyway. Bonds are our only business at BondExchange, so we do not issue liability insurance, but our agents often utilize brokers for this specific line of business. A list of brokers in this space can be found here.
How Can Insurance Agents Prospect for Illinois Consumer Installment Loan Customers?
The NMLS conveniently provides a public database to search for active consumer installment loan customers in Illinois. The database can be accessed here. Contact BondExchange for additional marketing resources. Agents can also leverage our print-mail relationships for discounted mailing services.