top of page

“We can stop sinking”: Legislators celebrate anniversary of Illinois’ break-up with payday lending

  • Writer: Keith Caldwell
    Keith Caldwell
  • Mar 30, 2022
  • 3 min read

by: Danny Connolly

Posted: Mar 23, 2022 / 08:02 PM EDT

Updated: Mar 24, 2022 / 09:30 AM EDT


SPRINGFIELD, Ill. (NEXSTAR) — Lawmakers celebrated the one-year anniversary of the passage of the Predatory Loan Prevention Act (PLPA) on Wednesday.

The PLPA sets a legal maximum interest rate for consumer loans at 36%. The bill, which was part of the Legislative Black Caucus’ Economic Equity agenda, passed both chambers in January 2021. Governor Pritzker signed the Act into law on March 23, 2021.

Before the law went into effect, the average interest rate for payday loans was 297% in Illinois over an annual basis. For example, a person taking out a $500 loan with 297% annual percentage rate would have to pay a total of $1,485 over 12 months, or $623.75 if they paid it all back after just one month.



According to the Center for Responsible Lending, several border states have higher average APR rates: Missouri’s 527% APR and Wisconsin’s 516% APR are among the highest in the nation. Still, Illinois residents paid over $500 million in payday and title loans fees per year, the fourth highest in the nation.


Representative Sonya Harper (D-Chicago) knows first-hand how hard it is to escape debt after lending with a payday loan. As a single mother paying for childcare, she went to a payday loan location at a mall as bills piled up. Harper says she had to forgo a month without income just to catch up.


“If I didn’t do that, right there, my bill would grow even more and even further.” Harper said.

She’s glad other families have better choices to alleviate financial crises.

“No other families should be able to get into this type of debt that they can’t get out of that robs them of the very salary they go to work for,“ Harper said.


Predatory loans have disproportionately affected Black and Brown neighborhoods in Chicago.


State senator Cristina Castro (D-Elgin) said residents of Latino neighborhoods are twice as likely to get payday loans as residents of white neighborhoods. Rep. Harper says residents in the predominantly black neighborhood Austin are 13 times more likely to have a payday loan than residents in predominantly white Lincoln Park.


“Because of predatory lending, economic development in our communities has been like trying to sail with a hole in the boat,” Sen. Jacqueline Collins (D-Chicago) said. “With the PLPA, we can stop sinking, and invest more in our families and communities.”


Another group often targeted by payday lending is veterans. While the federal Military Lending Act protects active duty members from loans with more than 36% interest, it does nothing for reserve members, veterans, or Gold star families.


“Now, all the protections that we wanted for the entire suite of those who serve our nation and who deserve our protections, are there.” Col. Paul Kentwell, the executive director of Rule of Law Institute, said. “This is a fabulous accomplishment.”


The Woodstock Institute, a non-profit group that advocates for consumer finances, lobbied for the bill and celebrated its anniversary.


“Affordable lenders are expanding and more families are addressing their financial needs without taking on more debt.” Brent Adams, senior vice president at the Woodstock Institute, said.


For Illinois residents in a financial crisis, the Woodstock Institute created WeProsperIL, a website with guides on how to pay off bills while avoiding high-interest loans.

1 Comment


Carmen Rodriguez
Carmen Rodriguez
Apr 02

The Predatory Loan Prevention Act is a crucial step in protecting consumers from exorbitant interest rates that can trap them in cycles of debt. With payday loans previously carrying rates as high as 297% in Illinois, capping interest at 36% provides much-needed relief. While this legislation is a positive move, borrowers still need access to fair and affordable financial solutions. Low interest personal loans can serve as a viable alternative, offering reasonable repayment terms without the burden of excessive fees. Expanding financial education and promoting responsible lending options will further help individuals break free from predatory lending practices and achieve long-term financial stability.

Like
illinois-seal---white.png

Let me know how I can assist you.

District Office:
2015 West 63rd St. Chicago, IL 60636
(773) 925-6580

(773) 268-4806

Satellite Office:
5222 S. Halsted

Chicago, IL  60609 (773) 925-6580

(773) 268-4806

Thanks for submitting!

bottom of page