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Payday loaning in Arizona to end by operation sunset

Posted Jun 23 2010 2:23am
In June of 2000, the Arizona legislature approved a bill that gave payday loan lenders just about 10 years of authorization to operate within the state. In November of 2008, Arizona voters defeated a ballot proposition that would have extended this authorization indefinitely. Payday lender won’t be able to legally operate as of June 30, 2010.

Article Source: Operation Sunset to end personal loan companies in Arizona

New lending limits within the state of Arizona

June 30, 2010, Arizona lenders could have new regulations. All loans, including short-term loans, can be limited to 36 percent interest plus 5 percent for administrative expenses. Auto title lending is a form of short term credit that will still be available to customers in Arizona. The Arizona attorney general has set up a Facebook page and tip line where they are encouraging all of the citizens to report any lenders they believe are operating outside the new legal framework.

Arizona payday lenders effects

There are 75 companies that can operate pay day loan stores in Arizona. There are 650 operating locations out of these 75 companies. Of those storefront locations, about 200 have filed applications to convert their licenses to auto loan for bad credit businesses or pre-paid debit card businesses. Some companies have indicated they intend to stay open and will make an effort to offer short-term credit that comes at the 36 percent rate of interest cap. Most credit providers could be shutting down, nevertheless. Within the state, about 1,000 jobs can be lost. The Arizona Operation Sunset representatives have stated the Attorney General could be reviewing and changing the terms and conditions of all short-term credit transactions.

Reality of payday loan lenders in Arizona
Arizona's Operation Sunset claims that by forcing payday loan store out of business in Arizona, it is helping improve the financial stability of state citizens. A recent study by UC-Davis found that any short-term credit is simply too expensive and risky for banks and credit unions to offer. Short-term credit markets provide companies the money to pay all of their bills, make payroll and typically operate on a day-to-day basis. Similarly, short term credit and other financial services that many payday lenders offer are very useful for many individuals, including those who can't or choose not to have bank accounts.

Citations

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
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