Pawnbrokers Continue Making Loans at 243.3% APR Despite State Rate Cap of 36% APR

For Immediate Release:
September 26th, 2023

Rob Mayo (Woodstock Institute)

ILLINOIS – The American Fintech Council (AFC), the premier industry association representing responsible fintech companies and innovative banks who are creating critical access to safe and affordable financial services, today threw their weight behind efforts by consumer advocates to stop predatory pawn shop loans. Pawn shops are currently exploiting a loophole given to them by a judge in Sangamon County who issued an injunction in September 2021 to stop the State from enforcing the State’s 36% rate cap against pawn shops. 

Signed into law in March 2021, and also supported by the AFC, the rate cap, known as the Predatory Loan Prevention Act (PLPA), immediately began to save Illinois communities millions in loan fees and interest. When comparing two full calendar years – one year before the PLPA and one year after – Woodstock Institute found that the fees on high-cost loan products, including payday loans and auto title loans, went from $607,436,702 in 2019 to $1,279 in 2022, translating into hundreds of millions saved by consumers.

However, a Sangamon County Circuit Court judge granted pawn brokers an injunction allowing them to continue lending at rates as high as 243.3% APR. Now, the pawn loan industry aims to codify this loophole through legislation.

“As an association of responsible innovators, AFC is working to create regulatory standards that balance innovation with consumer protection and we publicly supported the PLPA and its 36 percent rate cap in January 2021,” said Phil Goldfeder, CEO of the American Fintech Council. “The law is intended to protect consumers from high interest and predatory lending while creating a level playing field for lenders. All lenders should be held to the same standard to ensure Illinois families have access to safe and affordable credit options.” 

Originally enacted as part of the Illinois Legislative Black Caucus Economic Equity Pillar, the PLPA represents an important policy effort for addressing Illinois’ racial wealth gap. Many investigations have found that predatory lenders directly target Black and brown communities.

“Pawn loans in Illinois were capped at 36% APR for more than 80 years. For the past 30-plus years, they have been allowed to charge as much as 243.3% APR,” said Brent Adams, Senior Vice President of Policy and Advocacy at Woodstock Institute. “These exorbitant rates are mostly paid by folks who can least afford to pay them, including lower income people, migrants, and the unbanked.”

The American Fintech Council is the leading voice of the financial technology industry and its members collectively serve more than tens of millions of consumers annually. Its lender members are required to “advance standards of fairness and nondiscrimination” by adhering to responsible lending standards.


Woodstock Institute advances economic and racial justice within financial systems through research and advocacy across Illinois and the United States. Among our areas of focus are predatory lending, access to banking, debt collection, and municipal fines and fees.