Hang tough, Illinois, and cap interest rates on payday loans at 36%

Hang tough, Illinois, and cap interest rates on payday loans at 36%

Payday loan borrowers, burdened by triple-figure interest rates, frequently fall behind in paying other bills, put off spending for medical care and go bankrupt. They are also very often people of color.

Share All sharing options for: Hang tough, Illinois, and cap interest rates on payday loans at 36%

Gov. payday loans Erwin TN J.B. Pritzker is expected to sign the Predatory Loan Prevention Act, a bill capping interest rates on small loans to high-risk borrowers. But two trailer bills would water down the new law. Pat Nabong/Sun-Times

Six years ago, a woman in Downstate Springfield, Billie Aschmeller, took out a $596 short-term loan that carried a crazy high 304% annual interest rate. Even if she paid back the loan in the two years required by her lender, her total bill would exceed $3,000.

Before long, though, Aschmeller fell behind on other basic expenses, desperately trying to keep up with the loan so as not to lose the title to her car. Eventually, she ended up living in that car.

Editorials

Aschmeller regrets she ever went the payday and car title loan route, with its usury-high levels of interest, though her intentions – to buy a winter coat, crib and car seat for her pregnant daughter – were understandable. She is now an outspoken advocate in Illinois for cracking down on a short-term small loan industry that, by any measure, has left millions of Americans like her only poorer and more desperate.

A bill awaiting Gov. J.B. Pritzker’s signature, the Illinois Predatory Loan Prevention Act, would go a long way toward ending this sort of exploitation by the financial services industry, and there’s little doubt the governor will, in fact, sign it. Read more