For Immediate Release:
September 27, 2022
Contact:
Brent Adams | 773-844-5544
Jane Doyle | 708-527-7568
Predatory Lenders’ Predictions of Gloom-and-Doom Fail to Materialize as Consumers Embrace Illinois’s Interest Rate Cap
ILLINOIS – To test predatory lenders’ claims about the effects of the 36% rate cap mandated by The Predatory Loan Prevention Act (PLPA) in March 2021, Woodstock Institute commissioned a statewide poll. The poll is the first of its kind in the nation and measures consumer sentiment and access to credit after a rate cap has taken effect.
The results were clear, the doomsday rhetoric is just not true :
- 86% of Illinois residents support the rate cap. Support was overwhelmingly strong among Democrats, Republicans, and Independents alike.
- Contrary to predatory lenders’ predictions, Illinois consumers, including low-income adults, continue to have access to credit. Nearly two-thirds of low-income adults (62%) and more than two-thirds of adults overall (69%) were able to borrow money since the rate cap took effect.
- Consumers who have needed emergency cash since the rate cap took effect have employed a variety of methods to meet their needs. Using a credit card was the most common method (24% of low-income adults and 27% of all adults). Consumers also employed methods that did not involve taking on more debt. The second most common method was using personal savings (23% of low-income adults and 22% of all adults).
“A few years ago, I habitually used high-interest payday loans,” said Tanekia Smith, one of the poll’s respondents. “I would borrow $500 and pay off the loans early. Had I not, I would have ended up paying $1000 back each time. I support the 36% rate cap because I believe credit should be safe, especially for vulnerable consumers and people who are already struggling.”
“I’m convinced some of the predatory lenders have tattoos that say ‘access to credit’ because that is their only real argument and they’ve been repeating it for decades,” said Brent Adams, Senior Vice President of Policy & Communication at Woodstock Institute. “The reality is that the consumers who they purport to serve don’t want them.”
“Support for the interest rate cap is remarkably consistent across all major demographic groups in Illinois,” said David Mermin, partner at Lake Research Partners. “We rarely see such a consensus on a major policy issue at the state level.”
“Being poor in America is simply too expensive, and working families deserve protections from predatory lenders. It’s a shame to see families in vicious cycles of debt because they need to take out a loan to pay their rent or a utility bill,” said Congressman Chuy García, the lead sponsor of legislation to establish a nationwide rate cap of 36% APR. “I applaud Illinois for leading on this issue and will fight to end these cycles of debt that trap Chicagoans and so many Latino, Black, and poor communities across the country in poverty.”
The poll was conducted by Lake Research Partners and has a margin of error of +/- 4%, and surveyed 600 Illinois residents. Because payday loan borrowers are disproportionately lower income, 400 of the 600 respondents were lower income.