Does the Illinois Interest Act prohibit assessing a late fee whereby a payment is made in a current month (within courtesy period) but the payment is actually making a previous month's payment? For example, a borrower does not make his or her April 1 payment within the courtesy period so a late fee is assessed. The borrower makes one payment on May 5 that satisfies the April payment - customer is now due for May. If another payment is not made during the courtesy period to satisfy the May payment, may a late fee be assessed?

I have always said yes. The law says, "Only one delinquency charge may be collected on any such loan installment regardless of the period during which it remains in default." So, if the April 1 payment was still past due in May, and you charged another fee for the April payment, you would be in violation. But you are now charging for May. One fee for each past due payment is ok, but not two fees for the same payment.

Thanks; our system would not impose a late fee but was debating/discussing with a lender.