ROCKFORD, Ill. (WTVO) — Pawnbrokers across Illinois declared victory Wednesday morning after a bill that would have made it difficult for them to do business died on the Senate floor.
Senate Bill 4241 and House Bill 5840 would have capped interest rates pawn shops can charge on short-term loans at 3% each month.
Had that happened, the vice president of a local pawn business, who was in Springfield with 30 other brokers this week to lobby against the proposal, says many of the 222 shops in Illinois would have had to close.
“I feel like a weight has been lifted off my chest,” said Jason Vandiver of Paymaster Pawn & Jewelry. “We’re certainly not afraid to come down there and meet with our legislators and put it out all on the table. I think that’s what we did, and we really came out on top.”
Under current Illinois law, pawnbrokers can charge 20% interest each month on short-term loans, which are usually between $50 and $200. Vandiver says even at 20%, because of the small loan amounts, it is sometimes difficult to cover his expenses. At 3% it would have been impossible.
“Our biggest cost is labor, and so the amount of time it takes to process these small-dollar loans,” he said. “There’s not enough money there to operate anywhere near 3%.”
Senate bill 4241 was sponsored by Jacqueline Collins of Chicago, who released a statement Wednesday morning, saying most people favor her proposal.
“Loans that charge 240% APR are a perfect example of an issue that is controversial only in the Capitol,” Collins said. “Ordinary people resoundingly support rate caps and oppose exceptions for pawnbrokers. Last night was a win for highly paid industry lobbyists and industry cronies – at the expense of consumers.”
Andrew Chesney, a Republican from Freeport, sponsored the House bill. He’s now in the Illinois senate and could not be reached for comment.
The bills made it to the Senate floor but were not voted on. That means for them to pass, they will have to be filed again at a later date.