High-interest loans in Chicago target Black neighborhoods

A loan store in the Ashburn neighborhood on Chicago’s South Side. An advertisement for beauty products featuring three young Black women is on the brick wall next to the loan store’s front door. An analysis of 2019 borrower data found an abundance of high-interest loans in majority Black neighborhoods. Industry groups say they lend money to people who don’t qualify for traditional bank loans.

A loan store in the Ashburn neighborhood on Chicago’s South Side. An analysis of 2019 borrower data found an abundance of high-interest loans in majority Black neighborhoods. Industry groups say they lend money to people who don’t qualify for traditional bank loans. | Pat Nabong/Sun-Times

“Statistical significance on steroids” shows payday borrowers mostly lived in majority-Black ZIP codes.

Pointing out that high-interest loans proliferate in non-white Chicago neighborhoods is a bit like saying the sky is blue or the grass is green, but a consumer group says it’s proving it for the first time with hard numbers.

Using 2019 borrower loan data obtained from state regulators, the nonprofit Woodstock Institute found the top ZIP codes for payday loans, excluding the Loop, were majority-Black, including:

60619 and 60620 on the South Side, which include parts of Chatham, Burnside, Avalon Park and Greater Grand Crossing, Auburn Gresham and Washington Heights. Those ZIP codes had more than 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 and which had 15.8 payday loans per 100 people. That ZIP code covers an area that’s 90.7% Black.

In contrast, ZIP codes with the lowest incidence of payday borrowers were mostly white, such as 60614 in Lincoln Park. That area had 1.1 payday loans per 100 people in a ZIP code that’s 84% white.

The analysis included ZIP code data for borrowers with payday loans and payday installment loans, which largely disappeared as of March 23, when a new interest rate cap took effect in Illinois. The nonprofit …read more

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Source:: Chicago Sun Times

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