Illinois caps consumer rates at 36%, adopts state-level CRA

Illinois Gov. J.B. Pritzker signed a bill Tuesday capping interest rates on consumer loans at 36% and another bill that establishes community reinvestment standards for state-chartered financial institutions.

The anti-predatory-lending law, which takes effect immediately, applies across all consumer loan categories. Auto title loans in Illinois currently have an average annual percentage rate of 179%, and payday loans have an average APR of 297%, according to the governor’s office.

The other new law establishes standards for state regulators to assess lending by state-chartered banks, credit unions and nonbank mortgage lenders in economically disadvantaged communities.

Pritzker, a Democrat, said the two measures are part of a package of new laws that address racial-equity gaps in Illinois. Other bills that he signed Tuesday address discrimination by employers against people with criminal records, aim to provide access to state contracts for minority-owned businesses and seek to improve access to public housing.

“While there is more work to do, we are a better state for what’s in this legislation today,” Pritzker said in a written statement.

“While there is more work to do, we are a better state for what’s in this legislation today,” Illinois Gov. J.B. Pritzker said after signing bills that cap rates on consumer loans and establish state-level community reinvestment standards.


The rate cap makes Illinois the 18th state plus the District of Columbia to limit interest rates on consumer loans to 36% or below, according to the Center for Responsible Lending. Nebraska and South Dakota have adopted similar caps in recent years.

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The Illinois rate cap law will apply to all consumers, but it relies on definitions established by the Military Lending Act, a 15-year-old federal law that applies to loans made to service members and their families. The military annual percentage rate includes more fees than a standard APR does.

“Today is the culmination of over 20 years of advocacy,” Brent Adams, senior vice president of policy and communications at the Woodstock Institute, said in a press release. “Thanks to the leadership of the Legislative Black Caucus, Illinois will go from being home to some of the worst abuses in the industry to setting a new bar in consumer financial protection.”

The Illinois community reinvestment law is designed to incentivize additional safe lending into low-income and moderate-income communities, according to the governor’s office.

Unlike the federal Community Reinvestment Act, it applies to credit unions and nonbank mortgage lenders. Illinois joins a small number of states, including New York, Connecticut and Massachusetts, that have their own community reinvestment laws.

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