The Arizona legislature approved a bill that gave payday loan store 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. As of June 30, 2010, payday loan company in Arizona will no longer have legal authorization to operate.
Article Resource: Operation Sunset to end loan company in Arizona By Personal Money Store
Arizona new lending limits
Lenders may have new regulations June 30, 2010. All loans, including any of the short term loans, will be limited to 36 percent interest plus 5 percent for 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 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 effects on all Arizona payday lenders
You will find 75 companies that can operate pay day 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 loans for bad credit companies or pre-paid debit card businesses. Some companies have indicated they intend to stay open and will try to offer short-term credit at the 36 percent rate of interest cap. Most of the lenders plan to shut down. In the state, about 1,000 jobs can be lost. The Arizona Operation Sunset representatives have stated that the Attorney General could be scrutinizing the terms and conditions of all short-term credit transactions.
Reality of payday loans direct lender in Arizona
Arizona’s Operation Sunset says that by forcing money lender out of business in the state of 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 costly and risky for banks and credit unions to offer. Short-term credit markets often provide businesses the money to pay their bills, make payroll and generally 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 can’t or choose not to have bank accounts.
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Arizona Attorney General’s Office