DURHAM, N.C. – Today, Governor J.B. Pritzker is signing the Illinois Predatory Loan Prevention Act, which caps annual interest on consumer loans at 36%. The bill was part of a package put forth by the Legislative Black Caucus to address racial inequities in the state. It will save Illinois families more than $500 million per year in predatory fees and provide protections covering more than 12 million people. It passed the legislature with bipartisan support and by wide margins.
Payday and car title loans typically charge over 300% annual interest in Illinois and trap borrowers in a long-term, damaging cycle of debt. Nationally, the average borrower ends up with 10 loans per year and payday lenders derive 75% of their fees from borrowers who end up with more than 10 loans per year, demonstrating that the long-term debt trap is the rule and not the exception. The debt trap is associated with a cascade of financial troubles, including an inability to meet basic living expenses, an accumulation of bank fees, closed bank accounts and bankruptcy.
As the governor signs the bill into law, an updated map of the United States shows Illinois becoming the eighteenth state plus D.C. that caps annual interest rates at 36% or less to stop predatory lending. Last November, Nebraska citizens passed a rate cap ballot measure with an overwhelming majority of the vote.
Center for Responsible Lending Director of State Policy Lisa Stifler made the following statement:
We applaud Governor Pritzker for signing the Predatory Loan Prevention Act into law. Hundreds of community groups, civil rights organizations, faith leaders, and others joined the Legislative Black Caucus in pushing for the historic reform, which will save the state’s families more than $500 million per year, dollars that can be put back into the local economy. Communities of color are targeted by this entrapment, and as COVID continues to ravage these communities, an end to predatory debt traps is essential.
As the bill becomes law, Illinois joins the strong trend across the nation toward passing rate caps to stop predatory lending. Eighteen states plus the District of Columbia have now rejected triple-digit interest predatory lending. Their protections cover over 100 million people nationally, keeping billions of dollars in the pockets of those with few resources, and opening up the market for healthy and responsible credit and resources that provide real benefits. We must also pass federal reforms, to protect these state caps and expand protections across the country.
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