Pawnbrokers to Continue Charging 240% APR or more to Illinois Veterans and Consumers

For Immediate Release:

January 11, 2023


Brent Adams | | (773) 844-5544

Jane Doyle | | (708) 527-7568

Zachary Braun | | (815) 909-7389

SPRINGFIELD – Pawnbrokers and their lobbyists stopped the Illinois General Assembly from passing legislation that would have made it illegal for pawn shops to charge triple-digit interest rates on consumer loans, despite the passage of the 2021 Predatory Loan Prevention Act (PLPA), which set an annual percentage rate (APR) cap of 36%.

“Loans that charge 240% APR are a perfect example of an issue that is controversial only in the Capitol,” said State Sen. Jacqueline Collins (D-Chicago). “Ordinary people resoundingly support rate caps and oppose exceptions for pawnbrokers. Last night was a win for highly paid industry lobbyists and industry cronies – at the expense of consumers.” 

Today marks the end of Senator Collins’s 20-year career in the Illinois State Senate. She dedicated much of her time in the Senate to civil rights and protecting vulnerable communities from economic exploitation.

As part of the Illinois Legislative Black Caucus’s “Economic Access Pillar” to end systemic racism, the state passed the PLPA in 2021 to stop predatory consumer loans in Illinois, capping rates at 36% APR. Despite this groundbreaking legislation, a judge in Sangamon County Circuit Court granted pawnbrokers an injunction in September 2021 allowing them to continue charging predatory interest rates of up to 243.3% APR. Woodstock Institute published a dissent to the judge’s opinion late last year.

“Closing the pawnbroker loophole remains a critical part of protecting the Economic Pillar that the legislature passed in 2021 to end systemic racism in our state,” said Teresa Haley, President, NAACP State Conference. “But these systems have been fortified for centuries and won’t disappear without a fight.”

“Every day we wait to close this loophole costs customers more than $100,000 a day in pawnbrokers fees,” said William McNary, Co-Director, Citizen Action/Illinois. Capping the interest rate at 36% means more money in consumers pockets for spending, saving, and investing. That’s not only good for consumers, but also the community and the local economy.”

The bill the Senate attempted to pass during lame duck session would have fixed the problem and closed the loophole created by the injunction, but the pawnshop industry fought the effort by paying an army of lobbyists and bringing hoards of pawnbrokers to the Capitol. Including both lobbyists and pawnbrokers, consumer groups were outnumbered by about ten-to-one.

“It’s easy to mobilize people who are making money, even if it’s at the expense of people who are losing money,” said Brent E. Adams, Vice President for Policy and Communication at Woodstock Institute and former head of the state agency that regulates consumer lenders in Illinois. “Not closing the loophole means consumers previously targeted by the payday lenders will now be targeted by the pawnbrokers. It is also an invitation for consumer lenders who are currently complying with the 36% cap to come to the legislature asking for their own loophole.”

“The coalition of advocates fighting against predatory pawn loans represented over one million people in Illinois: SEIU, AARP, the Catholic Conference of Illinois, the Illinois Hispanic Chamber of Commerce, and others worked tirelessly to help pass this bill,” Adams said. “We’ll be back.”

In Ohio, when the state capped the rates on payday loans, the pawnshop industry grew by 97%.  A study of 2020 data by Woodstock Institute found that pawn shop loans cost Illinois consumers over $44 million – more than eight times as much in interest and fees as payday loans did. The research also found that Black and Latino/a households are about twice as likely to borrow pawn loans as compared to white households.

An investigation by Woodstock uncovered that, in addition to offering pawn loans with abusive interest rates to ordinary consumers, pawnbrokers charged 243% APR to an active-duty servicemember, which is against federal law. The federal Military Lending Act applies a rate cap of 36% APR to loans made to active-duty servicemembers.

While the pawnbrokers say they will shut down if they are unable to charge triple-digit interest rates, pawnbrokers operate successfully in other states at rates of 36% or lower. In addition, pawnbrokers in Illinois were capped at 3% per month (36% APR) from 1909-1991.

A recent poll regarding the impacts of the state interest rate cap shows that by a margin of more than 2 to 1, Illinoisans oppose “exceptions for pawnbrokers.” Eighty-six percent of Illinoisans support the PLPA rate cap. Support for the rate cap is overwhelming across political party affiliation. (See fact sheet)


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.