A clear message was sent to payday lenders last week by voters in Arizona, which rejected Proposition 200 by a 3 to 2 margin. And the payday lenders are most certainly unhappy campers, after spending more than 14.6 million in one of the most expensive advertising campaigns in Arizona’s history.
The ballot proposition that was backed by the payday lending industry was misleading in that to the unsuspecting, it might “appear to reform” unethical payday practices. But the voting public was not fooled: neither were consumer advocates, community groups, business leaders, and military and public servants. Bravo, Arizona! The editor of this site, Kristy Welsh, spent considerable time informing friends and people she met on the street what the bill was really about. (Did it have any effect? She likes to think so.)
Prior to 2000, there were less than 10 payday loan stores in Arizona, and the maximum amount of interest on a consumer loan was 36%. At current there are more payday loan stores than McDonald’s and Starbucks combined (770 and counting), and the average APR for a payday loan is 400%.
Currently fifteen states as well as Washington DC effectively ban payday loans utilizing strict consumer loan interest rate caps of (most typically) 36%. The failure of proposition 200 means the existing law in Arizona will be retained, subjecting payday lenders to the same regulation as all other lenders in the state of Arizona after 2010: an interest rate cap of 36%.
The failure of the payday industry to “pull the wool” over the eyes of the public and community leaders shows that the citizens of Arizona favor a crack-down on irresponsible lending practices, and will not tolerate the deceptive marketing practices and outrageous fee charged by payday lenders. These ballot victories send a message to policymakers everywhere: The 36 percent interest-rate cap that’s good for citizens in 15-plus states and for military families nationwide makes sense for citizens across the country.
Popularity: 15% [?]
7 responses so far ↓
1 payday loans // Nov 14, 2008 at 9:21 am
It is a shame that some states are banning payday lenders. They have helped out many people when in a bind.
2 payday loans // Nov 14, 2008 at 10:12 am
no one is more open about their rates, by law payday lenders have to disclose way more than any other lending agency.
3 Kristy // Nov 14, 2008 at 11:02 am
I can’t imagine that anyone has been helped by payday lenders, except the payday lenders themselves.
4 David Higuera // Nov 14, 2008 at 12:47 pm
Thank you for this post, Cindy. And to Kristy and everyone else out there who volunteered your time to educate your friends and colleagues about Prop 200, Bravo! and Thank you!
Cindy is exactly right. Arizonans sent a VERY CLEAR message in this election: 400 percent interest rates are UNACCEPTABLE. We must ensure that the 36% cap comes back into effect in 2010 as planned.
Keep your eye on our site for more updates as the legislative session begins…
http://www.200isNoReform.com
Thank you,
David Higuera
Arizonans for Responsible Lending
5 Faxless Payday Loans // Nov 17, 2008 at 9:14 am
Why do the people against payday lending not get it? An APR of 400% is amazingly high but it is NOT applicable. The Loans are SHORT TERM. If you have a loan out for 2 weeks, the say they are intended, the interest you pay is 16% (417% APR) only. If that rate is cut to 10 times less the lenders make 1.6 or 1.60 per hundred per 2 weeks. Of course the industry will have to shut down. Instead of just looking at numbers do a little research. If something works out great for parties A and B why should C come in and say this can’t happen?
6 Emily Winkle // Nov 17, 2008 at 12:49 pm
Hi, I’m Emily and I work with Check ‘n Go. And part of my job is to see what conversation is taking place about the payday loan industry. If you have any questions, please don’t hesitate to ask, or visit checkngo dot com.
7 Kristy // Nov 17, 2008 at 7:20 pm
Faxless, though the loans are SHORT TERM, during that SHORT TERM, they are still 400%.
Not buying into it.
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