High Interest [Usury] and Predatory Vehicle Title Loans in Illinois

Within the last month, our office has been retained to combat a predatory vehicle loan that resulted in a “wrongful repossession.” Specifically, a Wisconsin vehicle title loan company lent an Illinois borrower a loan against the title of her vehicle at an APR of 240%. Yes, that needs to be repeated, 240% APR.

Further, this Wisconsin lender came across the Illinois state line and knowingly violated Illinois’ APR statutory cap of 36%. The Wisconsin lender required bi-monthly payments, filed a lien against the vehicle as lienholder with the Illinois Secretary of State, and then “wrongfully repossessed” her Honda. We have filed a lawsuit against the Wisconsin lender and asked the court to void the loan agreement ab initio—meaning it has no legal effect in Illinois because it violated the Illinois APR statutory cap of 36%.

Across the United States, predatory vehicle lending, particularly those involving high-interest, short-term vehicle title loans—has increased and exposed consumers and borrowers to “usurious loans.” The “usurious loans” target borrowers who face financial hardship, have poor or no credit history, and promise quick cash while concealing excessive interest rates and exploitative terms.

In Illinois, where many borrowers already struggle with limited access to affordable credit, the impact of these lending schemes is especially severe. Lenders frequently operate through legal loopholes or out-of-state structures, offering loans that can exceed statutory interest rate caps and lead to “wrongful repossession.”

Key Takeaways

Key Topic	Summary
Illinois Usury and Predatory Lending Laws	Illinois caps vehicle loan interest rates at 36% APR under the PLPA to restrict the use of usurious lending practices.
Vehicle Title Loans and Consumer Risk	Vehicle title loans often trap vulnerable borrowers in high-cost, high-risk debt cycles.
Community Loans of America Lawsuit	CLA charged over 300% APR to Pennsylvanians; a multi-million-dollar settlement was reached.
Amend Illinois PLPA	FSC advocates for reducing Illinois’s 36% APR cap to 12%, aligning with enforcement tools like disablers and supporting fairer loan terms.
Legal Remedies for Borrowers	Borrowers can sue for restitution and report deceptive practices to state and federal agencies.
State-by-State Comparison	U.S. states vary widely in vehicle loan interest caps, with some enforcing strict APR limits and others offering flexible or tiered structures.
Consumer Protection Strategies	Consumers should know their rights, avoid verbal agreements, and thoroughly review loan terms.
Policy Reform Recommendations	Proposed reforms include stronger oversight, public databases, and clearer loan disclosures.

In this article, we explore the structure and consequences of high-interest and predatory vehicle title loans in Illinois, outlines recent legal actions taken to curb these practices, and outlines the remedies and protections available to affected consumers.

Understanding Usurious and Predatory Lending

The Illinois statutory framework clearly defines the limits of lawful vehicle loan interest rates. Under the Illinois Predatory Loan Prevention Act (PLPA), which came into effect in March 2021, interest rates for vehicle loans are capped at 36% APR, inclusive of all fees and charges. In our opinion, 36% is too high. Perhaps the Illinois legislature did not consider that most vehicle loans in Illinois often have interest rates between 24% and 36% APR which appear to be “legal”; however, when the APR plus the various miscellaneous terms and charges are factored in, those “legal” vehicle loans become “usurious” and exceed 36%.

We advocate for amendment to the Illinois PLPA to bring that rate at or below 25% as a growing majority of states have legislated. [See below.] Illinois needs to better combat “usurious loans”—which have historically plagued low-income, disabled veterans, and minority communities.

“Usurious loans,” by definition, exceed the legal interest rate ceiling. In Illinois, any loan agreement charging more than 36% APR is not only illegal but also exposes the lender to legal action. Borrowers can seek damages amounting to twice the total of all interest, discounts, and fees paid under the unlawful loan, along with court costs and reasonable attorney’s fees.

Predatory lending, while often involving high interest rates, encompasses a broader range of abusive practices—including vehicle title loans that put borrowers at risk of losing their only means of transportation under exploitative terms. According to the Illinois Attorney General, predatory loans are those made without regard for the borrower’s ability to repay, often through manipulation, deception, or aggressive sales tactics. The hallmarks of predatory lending include misleading promises, excessive fees, inflated loan amounts, and deceptive loan structures such as balloon payments and teaser rates.

Lawsuit Study: Pennsylvania v. Community Loans of America

A recent enforcement action in Pennsylvania highlights how predatory vehicle lending extends beyond state lines. In October 2023, Attorney General Michelle Henry announced a $2.2 million restitution settlement with Community Loans of America, Inc. (CLA), a national auto title lending company that issued thousands of unlawful loans to Pennsylvanians. Additionally, CLA agreed to cancel $3.7 million in outstanding consumer debt.

CLA, headquartered out of state and in Georgia, exploited Pennsylvanians by offering title loans with interest rates exceeding 300%. These loans were marketed to consumers facing personal financial crises, for example, high medical expenses or even recent job loss. Under Pennsylvania law, which caps interest rates at 25%, these loans were “usurious,” and illegal.

What made CLA’s actions particularly egregious was the use of deceptive tactics. Although CLA lacked any physical presence in Pennsylvania, it marketed loans through lead generators that falsely claimed to operate local offices. Consumers who searched Google for “Car Title Loan Philadelphia” were directed to phony locations but ultimately had to drive to Delaware to finalize the loan agreements. Regardless of location, Pennsylvania’s usury laws applied because CLA collected payments and repossessed vehicles within Philadelphia County and throughout Pennsylvania.

This lawsuit illustrates a growing trend: lenders seeking to bypass consumer protection laws by exploiting cross-border operations. The Pennsylvania Attorney General’s settlement not only secured restitution and debt cancellation but also signaled a warning to out-of-state lenders: unlawful lending practices will not go unpunished, regardless of jurisdiction.

The Illinois Vehicle Loan Crisis

In Illinois, similar concerns persist. Vehicle loans that exceed the 36% APR cap are targeted at low-income, elderly, and minority borrowers—those who have limited access to traditional credit.

The Illinois Attorney General has repeatedly cautioned consumers about common red flags associated with predatory vehicle loans. These include:

• False Promises and Guaranteed Approval: Marketing phrases such as “easy credit,” “we say yes to everybody,” or “no payment for 90 days” are often used to lure in borrowers without adequate disclosure.
• Excessive and Hidden Fees: Lenders may tack on undisclosed origination fees, credit insurance charges, or other unnecessary add-ons that inflate the overall cost of the loan.
• Adjustable and Balloon Interest Structures: Some loans start with low “teaser” rates that later spike or include balloon payments that make the loan unaffordable in the long term.
• Loan Flipping: Repeated refinancing without legitimate benefit, often referred to as “churning,” increases the borrower’s indebtedness while profiting the lender.

Legal Remedies and Enforcement in Illinois

Illinois law provides robust remedies for borrowers affected by usurious and predatory vehicle loans. In addition to the PLPA’s 36% APR cap, consumers can bring private lawsuits to recover damages and penalties. Legal recourse includes restitution, cancellation of unlawful debt, and compensation for emotional distress and lost property due to wrongful repossession.

Under the Illinois Consumer Fraud and Deceptive Business Practices Act, borrowers can also challenge deceptive advertising and misrepresentations related to loan terms. For example, if a lender promises fixed payments but applies an adjustable rate, the borrower may have grounds for a fraud claim.

The Illinois Attorney General’s office continues to pursue enforcement actions against violators. Collaborating with consumer advocacy organizations, the state actively investigates companies that exploit vulnerable borrowers through unfair vehicle loan terms.

The Role of Technology and Lending Practices

FS CORPS believes that with current technology, such as remote vehicle ignition starters or disablers—consumers should not be entering into vehicle loans with interest rates that exceed 12% APR and coupled with reasonable notice provisions for lateness or a failure to pay within a specified grace period, and the consequences would be vehicle immobilization and then repossession.

With technology and insight, Illinois could provide a path for a much lower vehicle loan ceiling of less than 36%.  Frankly, with technology and a far more reasonable vehicle loan ceiling, there are few reasons for vehicle loans to exceed 25% APR and, we would argue, there is no justification for any APR in excess of 12%.

Interest rates greater than 12% are unnecessarily punitive, especially for consumers who rely on their vehicles for work, medical appointments, and essential daily activities. The use of disabler technology strengthens a lender’s position, and this added control calls for fairer, more responsible lending standards.

Comparative Legal Responses to Predatory Vehicle Lending Across States

Predatory vehicle lending is not limited to Illinois. Across the United States, several states have implemented aggressive reforms, regulatory actions, or outright prohibitions to combat high-interest loans and exploitative practices. While legal frameworks vary, the underlying objective remains consistent: to protect economically vulnerable consumers from unjust lending terms.

Here’s how several states are addressing usurious and predatory vehicle lending:

• In California, the state imposes a 36% APR cap on consumer loans under $2,500. However, there is no cap on loans above that threshold, allowing interest rates to climb significantly for larger amounts. The California Department of Financial Protection and Innovation (DFPI) plays an active role in enforcing transparency and reporting requirements, demanding annual disclosures from lenders to monitor default trends and borrower outcomes.
• In Connecticut, interest rates for vehicle loans vary by vehicle age: 15% APR for new vehicles, 17% APR for used vehicles up to two years old, and 19% APR for older used vehicles. These statutory caps aim to protect consumers from excessive loan costs depending on the vehicle’s condition.
• In Florida, auto title lending is permitted, but the state enforces tiered interest rate caps: 30% on the first $2,000, 24% on amounts between $2,000 and $3,000, and 18% on amounts exceeding $3,000. While these limits exist on paper, consumer advocates warn that some lenders restructure loans or apply excessive fees to inflate the effective interest rate. Oversight is handled by the Florida Office of Financial Regulation.
• In Iowa, loans secured by a vehicle title for personal or household use are capped at 21% APR. For regulated loans, a tiered structure allows 36% APR on balances up to $3,000, 24% APR from $3,000 to $8,400, and 18% APR up to $30,000. These laws provide protection against excessive finance charges.
• In Kansas, the Uniform Consumer Credit Code (UCCC) sets a maximum rate of 15% APR for most consumer loans unless otherwise permitted by law. If no rate is specified in writing, the default statutory rate is 10% APR. These rules offer borrowers clarity and protection.
• In Kentucky, the general legal interest rate is 8% APR, but parties may agree in writing to a higher rate. For loans under $15,000, the cap is the lesser of 19% or 4% above the 90-day commercial paper rate. Loans above $15,000 are not subject to an interest cap, allowing for contract-based flexibility.
• In Michigan, lenders operating under the Michigan Credit Reform Act may charge up to 25% APR on vehicle loans. Licensed dealers must also comply with the Michigan Motor Vehicle Sales Finance Act and federal disclosure requirements under the Truth in Lending Act.
• In Minnesota, maximum APRs depend on the vehicle’s model year: 18% for newer vehicles, 19.75% for mid-aged vehicles, and 23.25% for older models. These statutory limits apply to retail installment contracts and override the state’s general usury laws in this context.
• In Missouri, parties can agree to an APR up to 10%, or higher if the “market rate” allows. The market rate is based on U.S. bond yields plus three percent. Loans exceeding permitted rates are considered usurious and subject to penalties.
• In Nebraska, vehicle loans under the Nebraska Installment Loan Act are capped at 24% APR on the first $1,000 of principal and 21% APR on any balance above that. Advance collection of interest is prohibited, and violations may result in mandatory refunds and penalties.
• In New Jersey, the legal interest rate is capped at 30% for individuals and 50% for corporations under the state’s criminal usury law. For unlicensed lenders, the civil usury cap is set at 16%. The New Jersey Department of Banking and Insurance strictly monitors and regulates loan practices, making it difficult for out-of-state predatory lenders to operate without facing enforcement actions.
• In New York, the state maintains some of the most stringent usury laws in the country. Interest rates above 16% are considered civil usury, while loans exceeding 25% APR are classified as criminal usury. Title loans are illegal in New York, and state regulators have pursued legal action against out-of-state and online lenders attempting to operate within the state. These firm restrictions offer some of the strongest consumer protections in the nation.
• In Ohio, vehicle lenders may charge up to 25% APR under various lending statutes. A tiered structure also permits 28% APR on the first $1,000 of the unpaid balance and 22% on amounts above that. Banks and credit unions may set rates up to 25% with certain fee exclusions.

These state-level efforts reflect a patchwork of protections—some robust, others less so. States like New York and California have prioritized strict enforcement and regulatory oversight. Collectively, these approaches highlight the urgent need for comprehensive and stronger state enforcement to close gaps and prevent exploitation across jurisdictions.

Consumer Protections and Advocacy

For Illinois residents, recognizing the signs of an abusive vehicle loan is the first step in safeguarding financial wellbeing. Borrowers who suspect unfair or predatory loan terms should take the following actions:

1. Know Their Rights

Understand that under the Illinois Predatory Loan Prevention Act (PLPA), the maximum allowable interest rate for most vehicle loans is capped at 36% APR, including all associated fees. If you have a vehicle loan between 24% to 36% APR, closely review the miscellaneous charges. Collectively, a vehicle loan that appears “legal” may not be. Borrowers should also be aware of their right to challenge abusive loan terms and pursue legal remedies if a lender violates state lending laws.

2. Review All Loan Documents

Before signing any loan agreement, take time to thoroughly examine all loan terms, including interest rates, repayment schedules, added fees, insurance charges, and prepayment penalties. Look for hidden clauses or ambiguous language. If something is unclear, request clarification or seek assistance before proceeding—once signed, the contract will be asserted by the lender as “binding.”

3. Avoid Verbal Promises

Do not rely on verbal assurances made by loan officers, brokers, or sales representatives. All promises related to payment schedules, interest rates, grace periods, or refinancing options should be clearly stated in writing. If an important term is not included in the contract, it likely will not be enforced in your favor later.

4. Seek Legal Help and Report Violations

If you believe you’re a victim of usurious or predatory vehicle lending, contact FS CORPS immediately. We are dedicated to protecting consumer rights from predatory auto lenders and ensuring that justice is served for those who have been exploited.

In addition to seeking legal counsel, it’s also important to report any suspected violations to the Illinois Attorney General’s Office or the Consumer Financial Protection Bureau (CFPB). These agencies can investigate misconduct, enforce penalties, and assist in recovering financial losses. Acting not only protects your own interests but also helps prevent future abuse of other consumers.

Policy Reform Recommendations

While Illinois has taken meaningful steps to address usurious and predatory vehicle lending through the Predatory Loan Prevention Act, further action is needed to close regulatory gaps, strengthen enforcement, and improve borrower protections. The following recommendations are aimed at policymakers, regulators, and consumer advocates committed to ensuring fair lending practices across the state:

• Mandatory Rate Disclosures in Large Print: Require lenders to display the full annual percentage rate (APR), total repayment amount, and all applicable fees in a large, easy-to-read format on the first page of every loan agreement. Clear and conspicuous disclosure empowers borrowers to make informed decisions and reduces the likelihood of hidden or misunderstood costs.
• Prohibit Prepayment Penalties: Legislation should ban prepayment penalties that discourage borrowers from paying off loans early. These penalties can trap borrowers in long-term debt and unfairly penalize those attempting to regain financial stability. Removing such provisions incentivizes responsible repayment and limits lender overreach.
• Enhance Licensing and Oversight: Illinois should consider more rigorous licensing standards for auto lenders and third-party brokers. This includes mandatory audits, regular reporting of loan performance data, and specific regulatory oversight of technologies like remote vehicle disablers. Strengthening regulatory compliance frameworks would deter misconduct and enable faster intervention when abuses occur.
• Public Awareness Campaigns: Invest in statewide public education campaigns to raise awareness about predatory lending tactics, borrowers’ legal rights, and available consumer protections. Outreach should focus on vulnerable populations—such as low-income, elderly, and minority communities—and include multilingual resources, digital materials, and collaborations with community organizations.
• Statewide Consumer Lending Registry: Establish a public, searchable database of licensed vehicle lenders, including information on filed complaints, resolved disputes, and regulatory actions. Transparency builds accountability and allows borrowers to verify the legitimacy and track record of lenders before entering into agreements.

These policy measures would help reinforce the progress already made under Illinois law and establish a stronger foundation for protecting consumers in the vehicle lending market. As predatory practices evolve, so too must the tools used to detect, prevent, and penalize them.

Conclusion

The threat of high interest and predatory vehicle lending in Illinois is not hypothetical—it is a growing crisis with real consequences for working families and the vulnerable. As illustrated by legal actions in Pennsylvania and beyond, states have the power to fight back. Illinois’ laws provide a foundation, but continued vigilance, enforcement, and public education are necessary to combat usurious practices.

Consumers who have entered into vehicle loan agreements with interest rates exceeding 36% APR should seek legal counsel immediately. Borrowers facing loan terms that are deceptive, confusing, or unaffordable also have rights and legal avenues to pursue meaningful relief. Ensuring accountability and protecting consumer rights must remain central in the effort to end predatory vehicle lending practices.