City Council checks into title loans

Jun 23, 2008

PEORIA — You've seen the ads on TV for "Che-Che-Check Into Cash," and have been asked to call "1-88-Titlemax."

But the popularity of the payday and title loan businesses behind these slick commercials has some city officials concerned. They believe their proliferation in Peoria will negatively impact property values and bring down neighborhoods.

To address the rapid growth of businesses practicing short-term lending in Peoria, the City Council will vote tonight on whether to place a 180-day moratorium on new payday and title loan shops opening up. If approved, city staff will examine permanent regulations on short-term lending businesses.

Second District Councilwoman Barbara Van Auken pushed for the moratorium after being contacted by a number of constituents complaining about the industry's growth in Peoria. For instance, there are nearly as many quick cash businesses on University Street between War Memorial Drive and Forrest Hill Avenue than there are fast food restaurants.

"They seem to be mushrooming," she said. "I thought it was a problem we have to take a careful look at."

Twelve states plus the District of Columbia prohibit loans charging triple-digit annual percentage rates. In Illinois, local governmental bodies such as the Springfield City Council are looking to restrict the distances in which payday loan businesses can locate from one another. In 2007, Belleville city officials voted to limit the number of payday loan businesses within city limits to no more than three.

Illinois state law regulates the maximum fee payday and title loan businesses can assess a borrower ($15.50 per $100 borrowed) and how much can be loaned to someone ($1,000 or 25 percent of gross monthly income). The $15.50 maximum charge equals about a 400 percent APR, which is far more than the 18 percent average credit card rate charged to borrowers, said Susan Hofer, spokeswoman with the Illinois Department of Financial and Professional Regulation.

"There are as many short-term lending stores as there are McDonald's in Illinois," she said.

Industry supporters, however, believe the payday and title loan businesses serve an important service for customers who want to avoid expensive credit card late fees, bounced check expenses and other costs associated with being unable to pay a bill.