Can Consumers Cope When Payday Loan Rates are Capped?
Survey results show promise for fast cash alternatives
A survey conducted by the Woodstock Institute with partners New America Chicago and the Chicago Urban League shows that payday loan rate caps are having a positive impact on consumers and communities.
The survey comes as Illinois experiences a new landscape in short-term, small dollar loans following the passage of the Predatory Loan Prevention Act (PLPA).
The survey found that consumers who previously relied on predatory loans–with average interest rates of up to 297%–have successfully used other avenues to gain access to capital following last year’s landmark legislation, the Predatory Loan Prevention Act, which caps consumer loans at an annual percentage rate (APR) of 36%.
Since that time, predatory lenders have closed en masse because their profit margins relied on trapping consumers in a cycle of debt. With such high interest rates, consumers would often be unable to pay without taking on even more debt. In just the five…
