Illinois Enacts Tough Limits on High-Cost Consumer Loans (1)

Illinois has enacted a 36% interest rate cap on consumer loans, a move that effectively bans payday lending in the state.

Illinois Gov. J.B. Pritzker (D) signed legislation Tuesday that caps rates on consumer loans under $40,000, including payday loans, auto title loans, and installment loans. The state’s 36% limit is in line with lending protections for service members under the federal Military Lending Act.

Interest rates on payday loans, which usually mature every 2 weeks, have reached as high 404% in Illinois, according to consumer advocates who backed the legislation.

The state’s new 36% rate cap also applies to ...