In June of 2000, the Arizona legislature approved a bill that gave personal loan company 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 . Payday loan store won’t be able to legally operate as of June 30, 2010.
New lending limits in Arizona
June 30, 2010, Arizona lenders will have new regulations. All loans, including short-term loans, could 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 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.
The effect on money lenders in Arizona
Currently, there are 75 companies in Arizona with licenses to operate pay day stores. There are 650 operating locations out of these 75 companies. Of those storefront locations, about 200 have filed applications to convert their licenses to either auto car loans businesses or pre-paid debit card providers. 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 interest rate cap. Nevertheless, most stores will shut down. This means approximately 1,000 lost jobs within the state. The Arizona Operation Sunset representatives have stated the Attorney General could be scrutinizing the terms and conditions of all short-term credit transactions.
Reality of payday loan store in Arizona
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 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 numerous payday lenders offer are very useful for numerous individuals, including those who can’t or choose not to have bank accounts.
More info on this topic
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
