The Arizona legislature approved a bill that gave personal loan company 10 years of authorization to operate within the state in June 2000. In November of 2008, Arizona voters defeated a ballot proposition that would have permanently extended this authorization. On June 30, 2010, all payday loan lenders in Arizona will no longer be able to operate legally.
Arizona new lending limits
June 30, 2010, Arizona lenders may have new regulations. All loans, including short-term loans, can be limited to 36 percent interest plus 5 percent for any of the administrative expenses. Auto title lending is a form of short term credit that will nevertheless be available to customers in Arizona. The Arizona attorney general has set up a Facebook page, website and tip line where they’re encouraging citizens to report any lenders they believe are operating outside the new legal framework.
The effect on payday loan companies in Arizona
In Arizona, you will find 75 companies able to operate payday loan stores. You will find 650 operating locations out of these 75 companies. Of those storefront locations, about 200 have filed applications to convert their licenses to either car loan companies or pre-paid debit card providers. Some businesses have indicated they intend to stay open and will make an effort to offer short-term credit at the 36 percent rate of interest cap. . Within the state, about 1,000 jobs could be lost. The Arizona Operation Sunset representatives explained that the Attorney General can be scrutinizing the terms and conditions of all short-term credit transactions.
Money lenders in Arizona reality
Arizona’s Operation Sunset claims that by forcing all of the payday lenders out of business in Arizona, it is helping improve the financial stability of state citizens. A recent study by UC-Davis, however, found that short-term credit is simply too expensive and risky for banks and credit unions to offer. Short-term credit markets provide businesses the money to pay all of their bills, make payroll and typically operate on a day-to-day basis. Similarly, the check cashing, short term credit, and other financial services that numerous payday lenders offer are very useful for numerous individuals, including those who cannot or choose not to have bank accounts.
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AZCentral.com
azcentral.com/arizonarepublic/local/articles/2010/06/10/20100610payday0610.html
Arizona Attorney General’s Office
azag.gov/operation_sunset/
Associated Press
google.com/hostednews/ap/article/ALeqM5hd4oR9WzL2f3xLfVj38DYSFLPJkQD9G83P9O0
