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The Predatory Loan Prevention Act that passed in 2021 instituted
a 36% APR interest rate cap on loans, but some pawnbrokers still
charge over 200% for loans. The state’s 36% interest rate cap
was part of the Illinois Legislative Black Caucus’ “Economic
Access Pillar,” a move the caucus said will help narrow the
racial and ethnic wealth gap.
A judge in Sangamon County Circuit Court granted pawnbrokers an
injunction in September 2021 allowing them to continue charging
higher interest rates.
Kelly Swisher, president of the Illinois Pawnbrokers
Association, told The Center Square the measure will hurt those
in need of short-term money.
“If you regulate us out of business, you are leaving a segment
of the population with nowhere to go,” Swisher said.
State Sen. Jacqueline Collins, D-Chicago, chair of the Senate
Financial Institutions Committee, said that is a fallacy.
“Pawnbrokers want you to think they are different from the
payday lenders, but pawnbrokers like payday lenders make a
living draining money from people who are struggling,” Collins
said.
Senate Bill 4241 could come up in the Senate when lawmakers
return Wednesday. It would need to pass there and then be taken
up by the House before the end of the 102nd General Assembly
Jan. 10.
Support for the interest rate cap is gaining momentum. A wide
swath of organizations and individuals support the legislation,
including the Catholic Conference of Illinois, the United Way of
Illinois, the NAACP, and the Illinois Hispanic Chamber of
Commerce.
The Woodstock Institute notes that nationally, annual interest
rates on pawn loans are as low as 12%, a third of what is being
proposed in Illinois.
“Regardless of the time of year, trying to make a profit off of
someone else’s hardship goes against central tenets of the
Jewish faith,” said Leah Greenblum, founder of Jewish Free Loan
Chicago, which provides zero interest loans to those in need.
Kevin Bessler reports on statewide issues in
Illinois for the Center Square. He has over 30 years of
experience in radio news reporting throughout the Midwest.
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