Some 40% of borrowers in Illinois ultimately default on repaying payday loans. In March, this Editorial Board supported the cap on payday loan rates, writing that Illinois should impose it out of fairness and for the sake of racial equity. “These lenders depend on the cycle of disinvestment and are irrelevant if communities prosper.” Adams, senior vice president of policy and communication at the Woodstock Institute, told us. If they weren’t, they would get a more safe and affordable product,” Brent E. “Consumers need triple-digit interest rate loans only if they are stuck in a cycle of disinvestment. The 60614 ZIP code, which includes Lincoln Park and is 84% white, showed the lowest incidence of payday borrowers. The ZIP codes included 6060 on the South Side, both of which are 95.7% Black and include Chatham, Avalon Park, Auburn Gresham and Washington Heights. The report highlights data produced by the nonprofit Woodstock Institute, which found that the top ZIP codes for payday loans were majority-Black. But what desperate borrower can dig themselves out of dire financial straits while borrowing money at an interest rate of 36%? Cycle of disinvestment Payday lenders point out that they’re serving neighborhoods and high-risk borrowers that other lenders avoid.
Lawmakers ought to be brainstorming some way to help vulnerable communities access credit without resorting to high-interest loans.
These exorbitant deals continue to proliferate in Black and Brown neighborhoods, as a report by the Sun-Times’ Stephanie Zimmermann makes clear. That remains the case, even though the Illinois Predatory Loan Prevention Act now puts a 36% cap on the annual percentage rate of interest lenders can charge. Payday loans, title loans and installment loans with exorbitant interest can place a financial death-grip on borrowers.
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