Will Payday Loans Disappear in Arizona?

Posted On: July 15, 2010 at 9:23 a.m.

Filed Under: arizona interest rates payday loan

Arizona is getting a lot of attention for a recent law that went into effect on July 1. This new law has required Payday loans lenders to cap interest rates at 36 percent. Because of the nature of these loans, that is almost impossible for such lenders to stay in business. “If you live in Arizona and are looking forward to taking out a payday loan, you may want to look elsewhere for financial assistance. Beginning July 1, payday lenders will be forced to follow banking procedure by capping their interest rates at 36 percent annually. [[ads]] This is considerably lower than the rates many payday lenders charge, which is sometimes as high as 460 percent annually. With the cap in place, most payday lenders say they won’t be able to stay in business. Those that do say they will likely shift their focus to auto title loans which can legally push rates to 204 percent annually (AZ Central)” (http://www.gobankingrates.com/loans/payday-lenders-forced-to-quit/). The arguments are always that 460 percent is too high, but if it is a one-time loan for $200, the fact is, it is often only a $25 (or so) fee. So, is Arizona doing the right thing, or are they eliminating an important service for families in financial emergencies?

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