SPRINGFIELD, Ill. – To protect consumers from the high cost of auto title loans, state Rep. Sue Scherer, D-Decatur, is sponsoring legislation to cap the annual interest rates on title-secured loans and create more fair lending practices.
“The interest rates on these loans have skyrocketed out of control to high amounts that are completely unreasonable for consumers to afford,” Scherer said. “We have to step in and put an end to these extreme lending practices that target our most vulnerable citizens.”
Scherer is supporting House Bill 2468, which sets new regulations for title-secured loans by imposing a cap on the annual percentage rate that may be charged on these loans. Current law limits the annual percentage rate on loans less than $40,000, but does not limit the interest rate that applies to title-secured loans. Under Scherer’s legislation, the annual percentage rate of a title-secured loan may not exceed 36%. Furthermore, the bill sets maximum loan terms and prohibits the licensee from charging any finance charge, interest, or fees on a loan in default.
“With no limits on car title loans, consumers are stuck paying thousands of dollars in extreme interest rates and excessive fees,” Scherer said. “This reckless practice puts people at risk of losing their cars for not being able to make the payments. That is why I’m supporting legislation to impose reasonable caps on these rates and crack down on predatory lenders.”