Predatory Loan Prevention Act caps interest rates for consumer loans at 36%

On March 23, 2021, Illinois Gov. JB Pritzker signed the Illinois Predatory Loan Prevention Act, which caps interest rates for consumer loans—such as payday loans, installment loans and auto title loans—at 36%. The legislation has its roots in work conducted by Paul Kantwill, executive director of the Rule of Law Institute at Loyola University Chicago School of Law.

As a senior official at the U.S. Department of Defense from 2011 to 2016, Kantwill led interagency federal rulemaking that implemented regulations to the Military Lending Act, creating enhanced protections from predatory lending products for active duty service members and their families. Since then, Kantwill and other consumer advocates have worked to expand those protections to others, including veterans. After arriving at Loyola in 2018, Kantwill and other consumer advocates continued to lobby U.S. Congress and state legislatures across America to adopt similar legislation protecting veterans and all vulnerable consumers. “We made the advocacy case for it and provided model language for such legislation,” Kantwill says.

Kantwill says that, based on the Military Lending Act regulations and model legislation, consumer advocates across Illinois drafted a state statute, the Predatory Lending Prevention Act (PLPA). Kantwill provided technical expertise and assistance and helped to advocate to get the bill passed, working closely with many groups and individuals on it, including State Sen. Jacqueline Collins (JD ’20), chief co-sponsor of the bill. The PLPA’s interest rate cap of 36% is the same interest rate cap set by the U.S. Department of Defense for loans to active members of the military and their families.

Upon signing the bill, Pritzker said, “With title and payday loans and loan rates that have soared past 100, 200, even 300% interest, this reform offers substantial protections to the low-income communities so often targeted by these predatory changes.”

The PLPA is one of four economic opportunity laws that make up the Illinois Legislative Black Caucus’ economic reform package.

Says Kantwill: “The signing of this law, creating reasonable interest rate caps on predatory products disproportionately impacting people and communities of color and women, can make a real difference in terms of social, economic, and racial justice. Advancing such justice is a key goal of the Rule of Law Institute.”