Households that do not have a bank account are nearly five times as likely to be pawnshop borrowers as households with a bank account. Over 80% of pawnshop loan borrowers are unbanked, which is one reason consumers turn to pawnbrokers for credit despite high interest rates.

Most non-bank consumer lenders in Illinois can now legally charge no more than a 36% Annual Percentage Rate (APR) because of the Predatory Loan Prevention Act (PLPA), which went into effect on March 23, 2021. Most, not all.

Pawnshops in Illinois can, and do, still charge up to a 243% APR, or 20% per month, for the loans they make (Chart 1).1 Testing has shown that some pawnshops even charge that rate to active-duty military personnel in violation of federal laws designed to protect service personnel from predatory lenders.