Free Illinois Promissory Note Template

An Illinois promissory note is a signed, written promise to repay money on set terms. Where the loan is a consumer loan, Illinois caps the annual percentage rate at 36%, and the consequence of going over is unusually harsh.

The Predatory Loan Prevention Act sets the rate limit that matters most for consumer lending. The Illinois Department of Financial and Professional Regulation enforces it.

The 36% Cap

That Act was signed on March 23, 2021. According to the department, it prohibits loans with an annual percentage rate above 36% on covered loans made after that date.

A Loan Above the Cap Is Void

Meanwhile, the department states the consequence plainly. Any covered loan made after March 23, 2021 with an APR above 36% is void. So the consumer does not have to repay it, and the lender may not collect, attempt to collect, or receive payment on it.

Which Loans the Cap Reaches

According to the department, the cap applies to consumer loans across the state. That includes loans under the Consumer Installment Loan Act and the Payday Loan Reform Act. Motor vehicle retail installment contracts and other retail installment contracts are covered too. The Illinois Attorney General describes the Act as barring most lenders from charging more than 36% APR on just about any consumer loan.

Older Loans and Unlicensed Lenders

Two points sit alongside the cap. A loan taken out before March 23, 2021 at more than 36% still has to be repaid. Separately, some lenders must hold an Illinois license. Where such a lender makes loans without one, the department says borrowers may not have to repay them.

It depends on who counts as a lender. The 36% cap is written for lenders making consumer loans. Because the department reads the Act’s definition of lender broadly, a private arrangement is not automatically outside it.

So the safe course is simple. Keep the rate on a consumer loan well below 36%, and put every term in writing. Before going near the limit, ask an Illinois attorney. The downside is not just lost interest: a covered loan over the cap cannot be collected at all.

Tip: The cap is measured as an APR, so fees and charges count, not just the stated interest rate. Add everything up before you settle on a figure for your Illinois promissory note.

Here, most of the care goes into the rate. Use these steps:

1. Decide whether the money is for consumer or business use.
2. For a consumer loan, total the interest and every fee as an APR.
3. Keep that figure clearly under 36%, and write it into the note.
4. Confirm whether the lender needs an Illinois license before lending repeatedly.
5. Date the note, and have the borrower and any cosigner sign.
6. Give each party a copy, and keep the original somewhere safe.

Again, the standard terms apply, with the full cost of credit spelled out.

• Lender and borrower names and addresses
• Principal amount
• Interest rate, and every fee or charge
• Loan purpose
• Payment schedule and due date
• Late payment and default terms
• Collateral, if secured
• Signatures and dates

Document Genius’s guided form builds your Illinois promissory note template step by step, ready to download or e-sign.