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Latest Woodstock Institute “Study” Seeks to Hide the Harsh Reality of the Illinois Rate Cap’s Impact on Consumers: Less Access to Credit for Those Who Need it Most

By January 17, 2024April 26th, 2024No Comments

ARLINGTON, Va. (January 16, 2024)—Responding to the latest Woodstock Institute report on the impact of Illinois’ 36 percent rate cap on consumers in the state, Online Lenders Alliance CEO Andrew Duke issued the following statement:

“Since Illinois’ 36% APR cap was signed into law, data and research show that many consumers in that state have suffered from less credit access and being forced into worse options and outcomes because they cannot make ends meet. The Woodstock Institute has once again issued a report with incomplete and cherry-picked data to take an unearned victory lap on this law. Right off the bat, the fact that one of the authors of  this flawed legislation is now an author of this report saying it’s a roaring success should raise questions about its validity.”

But the problems don’t stop there:

  • Woodstock talks about the new lenders that have entered Illinois following the rate cap, but ignores the fact that many more lenders have left the state. In fact, there are 50% fewer lender licenses in Illinois today than in the months preceding the interest rate cap.
  • Woodstock celebrates the fact that consumers are spending less in fees on new installment loans today, but also acknowledge that many consumers are turning to other small-dollar loan products that are arguably more expensive, like pawn loans. Woodstock also does not discuss the other options that consumers say they resort to, like overdraft fees or late bill payments.
  • The latest report by Woodstock touts its “scientific survey,” yet ignores its results that shows that only a fraction of low-income consumers have been able to obtain the credit they applied for. This complements the OLA survey in Illinois that also shows that many consumers are now unable to access credit due to the interest rate cap.
  • A study by three leading economists found that Illinois interest rate cap decreased the number of loans to subprime borrowers by 44 percent and increased the average loan size to subprime borrowers by 40 percent. And, as the Woodstock Institute even admits, consumers have shifted to plausibly inferior ways to meet their financial needs with the credit products they enjoyed previously no longer in the marketplace.
  • In addition, the authors reviewed the results of a survey conducted by the Online Lenders Alliance exclusively of those who had previously taken out loans above the legislated interest rate cap, finding:
    • Most borrowers say they have been unable to borrow money when they needed it after the interest rate cap went into effect.
    • Only 11 percent of survey respondents said that their financial well-being increased after the interest rate cap went into effect.
    • 79 percent of survey respondents said they wanted the option to return to their previous lender, even though they may no longer offer loans in Illinois after the rate cap’s imposition.


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