AARP Illinois commends state legislators for passing the Predatory Loan Prevention Act, which will prohibit lenders from charging exorbitant interest rates that harm Illinoisans 50+, especially those on low and fixed incomes.
Passed with the leadership and support of Illinois Black Caucus members Representative Sonya Harper, Senator Christopher Belt and Senator Jacqueline Collins, the new law prohibits lenders from charging more than 36% APR (annual percentage rate) on consumer loans. Considering that, in Illinois, the average APR on a payday loan is 297%, and the average APR on a title loan is 179%, these capped rates will help many avoid the cycle of debt these types of lending services cause.
“The efforts of legislators to pass this important bill will put a limit on cruel and exploitative lending practices that cause significant damage to the financial security of older Illinoisans and lead to significant problems paying for essential items like food, health care and medicine,” said AARP Illinois State Director Bob Gallo.
Additionally, these high-cost, small dollar loans have exacerbated the racial wealth gap and driven inequity. In Chicago, zip codes in communities of color represent 47% of the City’s population but have 72% of the City’s payday loans, and passing the Predatory Loan Prevention Act is a step in the right direction to promoting equity across the city and state.
AARP Illinois fights every day to create the systemic and structural changes needed to ensure equitable health, housing stability and economic systems for older adults of color, their loved ones and family caregivers, and we look forward to continuing this important work with legislators to enact legislation in support of these efforts.
This story is provided by AARP Illinois. Visit the AARP Illinois page for more news, events, and programs affecting retirement, health care, and more.
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