Short Term Loans

By: Narina Crain
By: Narina Crain

There are nearly 50 loan stores in the Rockford area such as Royce Financial that offer short term loans.

"We have over 14 competitors within just a 2 mile radius,"said Dori Castellanos, the store’s assistant manager.

State lawmakers put a 400 percent interest rate cap on these store's pay day loans. A pay-day loan is any loan given out for 120 days or less. So Royce financial, along with many other loan stores stopped offering pay day loans, and now provides loans for 121 days or more. These loans are called consumer installment loans... And they can charge up to one-thousand percent interest annually.

"Those loans have no interest rate cap, don't offer a payback period and equally importantly don't protect members of the military who are serving our country."

State regulators are trying to get the Illinois legislature to pass a new law that would put limits on 121 day installment loans. They want similar protections that are provided by the Illinois pay day loan reforms. But some in Springfield are worried the law could end up hurting consumers.

“Will that preclude people from being able to use legitimate programs? That's something we don't want to have happen," said state senator Dave Syverson.

Royce's assistant manager says the restrictions aren't fair to businesses. People who can't, or don't pay off their pay day loans, don't have to pay any additional interest after the loans come due.

"It basically just in a way showed that hey if you want to borrow money from these stores and if you don't want to pay, then fine," said Castellanos.

A lobbyist who spoke to 23 News is trying to work out a compromise with state lawmakers right now. He doesn't expect they will take any action during this fall veto session... But they could vote on reforms in the spring.


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