High-yield loans are particularly concentrated in black neighborhoods in Chicago
A variety of high-interest loans have targeted black neighborhoods in Chicago, an analysis of 2019 borrower data shows.
Based on information gathered by government regulators, the nonprofit Woodstock Institute discovered that the major zip codes for payday loans, except for the loop, are mostly Black, The. was Chicago Sun-Times reported. A breakdown of these zippers showed:
- 60619 and 60620 on the South Side, including parts of Chatham, Burnside, Avalon Park, Greater Grand Crossing, Auburn Gresham, and Washington Heights. These zip codes had over 16 payday loans per 100 people and are both 95.7% black.
- 60624 on the West Side, which includes parts of West Garfield Park, East Garfield Park, and Humboldt Park, had 15.8 payday loans per 100 people. This zip code covers an area that is 90.7% black.
In contrast, zip codes with the lowest incidence of payday borrowers were mostly white. Take 60614 in the Lincoln Park area. It had 1.1 payday loans per 100 people in a zip code that is 84% white.
The audit included zip code information for borrowers on payday loans and payday installment loans, most of which ended on March 23, when a new interest rate cap went into effect in Illinois. The data was obtained through a request to the Illinois Department of Financial and Professional Regulation.
Information from 2020 – albeit an unusual year for lending due to COVID-19 – was similar. It showed the top two zip codes, 60619 and 60620, followed by 60628. These zip codes include parts of Roseland, Pullman, West Pullman, and Riverdale that are 93.1% black.
Brent Adams, Senior Vice President of the Woodstock Institute and IDFPR Director under former Governor Pat Quinn, described it as “statistical significance in steroids.”
“These loans are specifically aimed at black communities,” says Adams. He went on to explain that high-interest loans perpetuate a status quo “steeped in racial and economic inequalities.”
The Woodstock Institute’s analysis is worrying, as studies have shown that black Americans have an average net worth about one-tenth the net worth of white Americans. And that’s mainly due to past discriminatory practices that hampered family wealth creation, including home mortgage rejection.
For their part, industry groups say they lend money to people who do not qualify for traditional bank loans Chicago Sun-Times reported.
Forest Park’s Tiffany Moore first took advantage of an installment lender when the COVID disease hit and a tenant of her investment property was unable to pay rent. Their $ 9,500 loan had a term of five years and an interest rate of 35.989%.
Even if the interest rate was below 36%, she realized that she would be paying back more than double the amount borrowed. So Moore paid it off early. “I thought I had to get rid of this,” she says. “How can you get on when they charge all this interest?”