-Number of Installment Lender Licenses Experienced Another Sharp Decline, Falling 13.4 Percent in the Past Year-
ARLINGTON, Va. (March 27, 2025)—Four years after Illinois implemented an “all in” 36 percent annual percentage rate cap, installment lender licenses have dropped every year since the legislation was signed with only 461 active installment lender licenses in the state as of January 1, 2025. In 2024, there was a drop of 13.4 percent, which came on top of a 9 percent decline in 2023. Prior to the rate cap taking effect, there were 1,065 active installment lender licenses on January 1, 2021, marking a total decrease of 57 percent under the rate cap law.
Data on the number of lender licenses was provided by the Illinois Department of Financial and Professional Regulation in response to a Freedom of Information Act Request by the Online Lenders Alliance.
“With every passing year, we see the continued negative outcomes from Illinois’ rate cap as credit tightens and lender licenses reach new all-time lows,” said Andrew Duke, CEO of the Online Lenders Alliance. “As the number of credit options continues to decline year over year, more borrowers are left with fewer choices to access money when they need it. The outcomes in Illinois should be a stark warning to every state looking to enact their own statewide rate cap experiments to consumers’ detriment.”
On March 23, 2021, Illinois’ Predatory Loan Prevention Act (PLPA) was signed into law, capping interest rates on consumer loans in the state at an “all-in” 36 percent annual percentage rate. An academic study by three leading economists determined that this law decreased the number of loans to subprime borrowers by 44 percent while increasing the average loan size to subprime borrowers by 40 percent.
Proponents of the PLPA continue to claim that the law is a great success and consumer lending options are expanding in Illinois. However, data obtained by the Online Lenders Alliance from a Freedom of Information Act request shows that installment lender licenses have declined nearly 57 percent from before the PLPA took effect to present day, even when new market entrants are taken into account. While the most precipitous drop occurred in the first year, the numbers have continued to decline each year since the law took effect.
To understand the impact of the 2021 rate cap on consumers, OLA surveyed previous borrowers who had taken out loans with APRs exceeding 36 percent. This data showed that most of those borrowers have since been unable to borrow money when they need it, with 80 percent of respondents wanting the option to return to their previous lender, most of whom are no longer in the marketplace. OLA is the only organization surveying borrowers who have actually used small dollar loans in Illinois to shed light on the rate cap’s impact.
In a second survey, included as an Appendix to the initial report, OLA sought comments from previous loan users to get a better understanding of their experiences in Illinois under the rate cap. Many consumers lamented the fact that there were now fewer available credit options. One consumer said that when unable to borrow money, they went without food and failed to pay their electric bill. Another lost a storage unit containing personal items and a third was faced with a foreclosure hearing on their home.
