Rate-Cap Legislation Pending in Illinois Threatens Pawn Store Operations Nationwide

December 12, 2022 

The pawn industry is facing a new legislative challenge in the form of a 36% APR cap, this time in Illinois. This APR cap would apply to all pawn transactions – not just those governed by the Military Lending Act. The Illinois bills are Senate Bill 4241 and House Bill 5840. These bills are similar to APR-cap bills pending in both houses of Congress, one of which is sponsored by an Illinois Congressman.  


“These measures would shut down pawn stores throughout Illinois and shut out Illinois consumers during a time of increased financial insecurity.” Kelly Swisher, President of the Illinois Pawnbrokers Association said. 


The National Pawnbrokers Association (NPA) has focused on providing extensive support to the Illinois Pawnbrokers Association in their efforts to educate legislators on the results to Illinois consumers if a 36% APR cap is placed on pawn transactions. 

Pawnbrokers know rate caps overlook the reality of costs involved in providing pawn transactions in different states and settings that range from inner cities to suburbs to more rural areas of the nation.  


Rate caps often harm the consumers that proponents intend to protect, as well as pawn store employees who may lose their jobs, pawn business owners, and the rest of the communities they live in and serve.  


Independent studies including one conducted by the Chief Economist of the Federal Reserve Board support what the pawn industry knows: that rate caps reduce the availability of loans and other financial services transactions for many consumers, including those un-served or under-served by banks, credit unions, and fintech companies. Rate caps will cause pawn stores to close – just as other businesses would if they were prohibited from charging enough to pay their costs and make a living. No currently regulated lender will make up for the loss consumers suffer when a pawn store closes. 


NPA board members, staff, and consultants including NPA’s Team GRC are working tirelessly to provide back-up to Kelly Swisher, the Illinois Pawnbrokers Association President, and all IPA members. We have prepared talking points, participated in conference calls, and performed research to rebut claims made by a Chicago-based nonprofit whose primary supporters are banks and fintech companies. We have engaged with the law firm that represented the IPA, NPA and other stakeholders in the lawsuit that led to the 2021 state-court injunction, which has kept the Illinois Department of Financial and Professional Regulation from enforcing the 2021 Predatory Loan Protection Act against Illinois pawnbrokers.   


The NPA stands with pawnbrokers in every state and intends to keep using our diverse resources to help state pawnbroker associations and individual pawnbroker members survive this latest challenge. We encourage all members to educate their community leaders and state legislators about pawn transactions and pawn consumers and remind the world what pawnbrokers proudly do in local municipalities day after day. Sincerely,Boyd NaylorNPA President