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Ill-gotten Gains: Predatory Lending and the Racial Wealth Gap in Chicago

Illinois opened the door to high-interest lending in the 1980s. Since then, payday, short-term installment, car title loans, pawn loans, and other consumer loans often charged interest rates up to 400 percent. Many high-interest, short-term loans are targeted to communities of color, draining wealth from both Black and Latino/a residents. To help combat this trend, the 2021 Predatory Loan Prevention Act (PLPA) capped interest rates on most consumer loans at 36 percent, ostensibly putting an end to these predatory loans in Illinois. This report examines how predatory loans have impacted Chicago’s Black and Latino/a communities financially and what policy changes are needed next to ensure Black and Latino/a communities have access to affordable options that will help them build wealth. The paper focuses on two types of payday loans due to the availability of data.

By Meegan Dugan Adell, Kathie Kane-Willis, Spencer Cowan, Hala Kourtu, and Vanessa Rangel

Watch | Stolen from Under My Nose: Real-life Stories of Payday and Title Loans

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