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Advocacy Group Warns Against Payday Loans
A group of consumer advocates is warning against borrowing holiday cash from payday loan stores.

Citizen Action Illinois is urging Illinois residents to avoid the high fee loans and is calling for a reform of the practice. A report by the Woodstock Institute shows on average, borrowers paid a $1,769 finance charge to borrow $1,224 for 319 days.

Co-director of Citizen Action Illinois, Lynda DeLaforge, says stricter regulation of short term loans is needed to protect customers from fees that, if they were expressed as interest rates, would amount to 700 percent a year.

"We want payday loan reform measures to be passed in the 2009 Illinois State Legislature," DeLaforge said. "This coalition is going to be working hard down in Springfield, and across the state of Illinois with our partners, to make sure that this happens."

DeLaforgue says the Payday Reform Act of 2005 allows installment loans over 120 days in length to be free of the consumer protections applicable to loans 120 days or shorter. The 2005 Act created fee caps, caps on borrowing to prevent over-borrowing and other reforms. DeLaforgue says Citizen Action Illinois and other groups are pushing for further regulation.
12 29 08 by Newsroom
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