Taking a Bite Out of Loan Sharks in Illinois
Cars in California, Federal "True Lender" Rule
Yesterday, Illinois Gov. JB Pritzker signed the Predatory Loan Prevention Act into Law. The legislation would cap interest rates on payday and other small dollar loans at 36%.
Here’s more on the move that will take a bite out of legalized loan sharking:
Consumer advocates have been pushing for the change. In fact, the Woodstock Institute recently released a report highlighting the economic advantages of the new law. Among them, the creation of jobs and the return of millions of consumer dollars to local economies.
The Predatory Loan Prevention Act (SB 1792), would directly address long-standing inequities by prohibiting lenders from charging more than 36 percent APR (annual percentage rate) on consumer loans. High-cost, small-dollar loans heighten the racial wealth gap, and stopping high interest payday lending is a significant step toward immediate relief for consumers.
In Illinois, the average APR on a payday loan is 297 percent, and the average APR on a title loan is 179 percent. While the existing federal law already protects active-duty military with a 36 percent APR cap, this legislation would extend the same protection to Illinois veterans and all other consumers.
Photo by Francesco Califano on Unsplash
Meanwhile, more than 300 consumer groups from across the country are urging Congress to repeal a Trump-era rule that allows payday lenders to evade state rate caps like the one just signed into law in Illinois:
“Congress must act to overturn this dangerous rule that will unleash predatory lending in all 50 states. Predatory lenders prey on veterans, small businesses, and communities of color, luring them into harmful loans that strip these consumers of hard-earned capital. Congress can, and should, stop these lenders by overturning the ‘fake lender’ rule,” said Rachel Gittleman, Financial Services Outreach Manager with Consumer Federation of America.
Turning to insurance, California’s Commissioner of Insurance has issued new rules that will level the playing field for blue collar workers who face discrimination in auto insurance pricing:
“Group insurance discounts are meant to empower consumers who purchase their car insurance through a group to which they belong, but some insurance companies have deformed this idea into discriminating against safe drivers in lower-wage occupations,” said J. Robert Hunter, CFA Insurance Director and former Texas Insurance Commissioner. “The draft regulations will stop insurance companies from punishing Californians who don’t have the right job title, while strengthening the ability of consumers to band together and get cheaper coverage.”