Lawmakers mark anniversary of protecting consumers from predatory lending

SPRING FIELD– On the anniversary of the proclamation of the Predatory Lending Prevention Act, State Senators Jacqueline Collins (D-Chicago) and Cristina Castro (D-Elgin) reflect on the importance of dismantling systemic barriers to fair lending practices, especially for communities of color at a press conference Wednesday.

“I’m incredibly happy to see a year have passed since I signed legislation capping interest rates on all consumer loans at 36%,” Collins said. “Abusive financial practices target communities of color and entrench racial poverty, which makes interest rate caps so critical to benefiting and restoring our vulnerable populations.”

On this day last year, Senate Bill 1792 of the 101st The General Assembly was signed into law by the governor after passing both houses with bipartisan support, formally establishing the Predatory Lending Prevention Act. This measure prohibits lenders from charging interest rates above 36% on consumer loans. The initiative, championed by Sen. Collins with the staunch support of fellow lawmakers such as Sen. Castro, is one part of an economic equity agenda introduced by the Illinois Black Legislative Caucus.

“Previously, vulnerable people looking to get back on their feet were forced to take out short-term loans with offensively high interest rates,” Castro said. “This legislation is essential to prevent predatory lending practices and will help build credibility in our communities for future generations.”

The law helps borrowers, primarily those in communities of color and low-income communities, escape the vicious circle of debt associated with interest rates and fees. Studies show that individuals from predominantly black communities are more likely to have a payday loan than their white counterparts. While historically disenfranchised populations are more reliant on financial institutions for economic support, the 36% rate cap has demonstrated its benefit for black and brown communities.

Through their dedication and service to economically disadvantaged communities, lawmakers continue to work toward closing the racial wealth gap in our state.