With the start of a new year, we decided to look back on the impact of the 36% interest rate cap set by the Predatory Loan Prevention Act (PLPA) on Illinoisans in 2021.
The bottom line is that the PLPA has exceeded our expectations! Here are some highlights:
- PLPA has saved Illinoisans millions in fees: Comparing a 5-month period in 2019, before the PLPA passed to the same period in 2021 — including months after the PLPA passed — Illinois consumers saved over $200 million in fees for high-cost loans. At the same time, Capital Good Fund, a nonprofit small-dollar lender, reported a daily application volume increase of over 70% within days of the law’s signing. Not yet reported are the loans made by other affordable online lenders since the PLPA.
- New, affordable lenders are moving into Illinois: While payday and title lenders have, for the most part, left the state, IDFPR has granted at least 67 new licenses to installment lenders since 2/15/21. This means that affordable lenders are filling the void left by the departure of the predatory lenders. Learn more about affordable options in our Resource Guide at WeProsperIL.org.
As in other states with rate caps, rogue online lenders charging astronomical rates are trying to take advantage of the exit of payday and title lenders.
These illegal lenders – some based in exotic, faraway places and some calling themselves “tribal lenders” – have been around for decades, but they’re trying to profit from the fact that the legal predatory lenders have gone. If you or someone you know come across these illegal lenders or any lender charging in excess of 36%, please report them to the Attorney General and let us know.