The new Illinois payday loan law has taken effect as of March 1, 2011. The law mandates a cap on the allowable interest lenders may charge for payday loans.

The Illinois law states lenders offering loans with terms of six months or less may not charge rates greater than $15.50 per $100 borrowed every two weeks. In addition, the law mandates borrowers must be completely paid off within 180 days; and balloon payments are outlawed, as well.

There's more. Lenders must restrict loan repayments to a maximum of 25% of a borrowers gross monthly income. Post-default interest is prohibited, as are fees for attorney's fees and other court costs associated with recovering outstanding payday loans.