Pawnbrokers claim two Illinois bills could hurt business

Published: Dec. 8, 2022 at 5:31 PM CST
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ROCKFORD, Ill. (WIFR) - House Bill 5840 and Senate Bill 4241 are drastically decreasing the interest rates brokers can charge at their stores.

“People need money sometimes―$20, $40―and this bill would prohibit us from operating loans like that,” said Pawn Daddy owner Bruce Swartz.

Swartz and Pawn Daddy manager Jeremy Brown says pawn shops are one of the few places people can go to make quick cash.

“If a car breaks down on Wednesday and he has to go to work Thursday morning, he needs money to fix his car or he loses his job,” Swartz said.

The two bills hold pawnbrokers to the same standard set by the Predatory Loan Prevention Act. It caps interest rates on short-term loans at 36% for the year, or 3% for the month, without pawn shops being able to add any extra fees.

“If the bill passes, I mean on $100 loan we’d make $3; that’s, borderline, not worth it,” Brown told 23 News.

However, lawmakers say some pawn shops take advantage of their customers.

“They’re not necessarily regulated by what they can charge right? So when you factor in the application fees. They may not have the original 200 percent interest, but when you factor in all of what that includes, it turns out to be a pretty astronomical number,” said State Rep. Andrew Chesney, a sponsor of the House Bill.

Chesney says Republicans and Democrats agree if rates rise 100% or 200% because of extra fees, then something must be done to protect consumers.

“The title industry, the payday loan industry have all adjusted to the 36 percent, because we need to protect consumers as well, and I think most people agree with that,” he said.

Pawn Daddy’s leadership says this makes it tough to cater to the people who rely on their business to get by.

“I mean people come in here, they know us by a first name basis, we know what they want, they’re here to do what they need to do, they’re happy with us, every day!” said Brown.

23 News also spoke with Kelly Swisher, President of the Illinois Pawnbrokers Association. He agrees these bills would be catastrophic for Pawn Shops if they pass. Nevertheless, both bills have gained support from both sides of the aisle in Springfield.