ROCKFORD, Ill. (WTVO) — Jason Vandiver has his entire week planned out.
The vice president of Paymaster Pawn & Jewelers is working Monday and Tuesday.
On Wednesday, he’s driving to Springfield to join 100 other pawnbrokers to let as many state lawmakers as possible know that proposals to cap the interest rates they charge could devastate their industry.
If Senate Bill 4241 and House Bill 5840 pass, pawn shops would be included in the Predatory Loan Prevention Act. Under those bills, that annual percentage rate (APR) on a short-term pawn shop loan would be capped at 36%, or 3% per month. Shops would also be barred from charging additional fees.
Under those terms, Vandiver says, the majority of the state’s pawnbrokers, would have to close their doors.
“We wouldn’t be able to loan money at that interest rate, given the small dollar amount and the timeframe that our loans are,” Vandiver said.
Vandiver says the typical pawnshop loan is between $50 and $200 and is usually paid back within 30 to 60 days. On a 100-dollar loan, a customer would pay back $120 in a month, a provision allowed under the current state law. If the new law passes, the same loan would only pay pawnbrokers $3.
“All of the work that it takes to process our loans, for us to only make $3 on a $100, it just wouldn’t be enough to keep the lights on,” he said.
Vandiver’s family has owned Paymaster Pawn & Jewelry since the early 1980s. The company does more than 10,000 loans of around $150 every year at its Rockford store alone. He says the need that financing fills is a necessary one, as he his customers are not always in the position to seek bank or other financing for short-term cash.
“That’s 10,000 consumers that wouldn’t have a place to turn for their small-dollar loans,” he said. “That’s our store. There’s other stores in town. So, consumers are certainly out using our services as an industry, as a whole. And this would be a very negative effect on our local economy.”
Senate Bill 4241 is sponsored by Democrat Jacqueline Collins, who could not be reached for comment but released a statement late last year, saying, “We must expand the law to cover loans from other servicers so that working people are not taken advantage of and have the opportunity to build lasting economic stability.”
Outgoing Republican state Rep. Andrew Chesney was a co-sponsor of House Bill 5840. He was also unavailable for comment.
The Illinois House reconvenes Jan. 4. The Senate is back in session Jan. 11.
There are currently 222 pawn shops in Illinois, small businesses that employ more than 1,000 people.