Stopping Payday Predators Creates Jobs

The Woodstock Institute has produced a report indicating that capping payday loan interest rates in Illinois at 36% would create jobs and stimulate economic activity.

According to the Center for Responsible Lending, the maximum rate on small dollar loans (payday, car title) in Illinois is 404%.

The Predatory Loan Prevention Act seeks to change that, capping interest rates at 36%. According to Woodstock, doing so would have a number of benefits. Consider the following:

Based on just the estimated savings in fees paid to out-of-state lenders, the multiplier effect could add between $475 million and $634 million in local economic activity. Based on the savings for fees paid for payday loans, installment payday loans, and auto title loans to both in-state and out-of-state lenders, the impact could be between $638 million and over $835 million.

This renewed economic activity also has a job creation impact:

Based on data showing total fees paid in 2019 by Illinoisans on payday loans, installment payday loans, and auto title loans, Woodstock projects the law will create 5,673 jobs, a net gain over the 5,000 jobs opponents claim will be lost, which is, itself, debatable.

The payday predators suggest rate caps will cause lost jobs, but the analysis from…