ARLINGTON, Va. (October 4, 2022)—Responding to an attack on a previous survey of small dollar loan borrowers and a recent poll commissioned by the Woodstock Institute regarding the rate cap law that went into effect in Illinois last year, Online Lenders Alliance Executive Director Andrew Duke issued the following statement:
“Despite this ridiculous attack, we make no apologies for obtaining feedback and data from borrowers who have actually used small dollar loans in Illinois to shed light on the impact of the rate cap. I know the advocates don’t like when people point out the flaws in their politically-driven agenda, especially when it’s the very consumers they claim to be protecting. However, the results from the survey of previous borrowers speak for themselves, and they are echoed by a recent Morning Consult poll of 1,000 adults who had applied for or taken out a personal loan.”
As a previous survey of Illinois borrowers who actually used short-term, small-dollar loans found, most found that their financial situation did not improve as promised and actually declined in many instances. It also found that:
- Those making less than $50,000 per year are more likely than other groups to say that that short-term, small-dollar loans helped them manage their financial situations.
- The 36 percent APR cap that Illinois implemented has failed to improve the financial well-being of Illinois residents, specifically those who relied on short-term, small-dollar loans.
- Most former short-term, small-dollar loan users struggled with paying their bills since the APR cap took effect in March 2021. At the same time, a majority of borrowers indicated they were unable to access credit at some point following the rate cap.
- When unable to obtain credit, consumers said they were left with poor alternatives, including late bill payments, skipping urgent appointments or vital expenses, or pawning valuables.
- The vast majority of borrowers want the option to return to their previous lender, demonstrating support for the loan options available before the rate cap.
These findings are echoed by another recent Morning Consult study of consumers nationally, which found that:
- Millions of Americans, specifically those who are riskier borrowers, still lack access to credit, despite recent advancements in innovation and financial technology.
- Americans who are unable to access credit experience a variety of negative outcomes, including late bill payments, cutting back expenses, and skipping meals.
About The Online Lenders Alliance
The Online Lenders Alliance (OLA) is the first trade association in FinTech. OLA is focused on credit inclusion, bringing together a diverse group of innovative companies who share a common goal: to serve hardworking Americans who deserve access to trustworthy credit. Our members are entrepreneurs, publicly-traded companies, lenders, credit bureaus, advertisers, lead generators, compliance professionals, and software developers who are leveraging technology to responsibly improve consumers’ financial health. Consumer protection is our top priority and OLA members abide by a rigorous set of Best Practices and Code of Conduct to ensure consumers are fully informed and fairly treated. For more information, please visit www.onlinelendersalliance.org.