Operation Sunset to end money lender in Arizona

The Arizona legislature approved a bill that gave payday loans direct lender 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 extended this authorization indefinitely. On June 30, 2010, all payday lenders in Arizona will no longer be able to operate legally.

Resource for this article: Operation Sunset to end payday loans direct lender in Arizona

New lending limits in the state of Arizona

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

The effect on private money lenders in Arizona

Currently, you will find 75 companies in Arizona with licenses to operate payday loans stores. These 75 companies have about 650 operating locations. Of those storefront locations, there are about 200 that have filed applications to convert their licenses to either car loan businesses or pre-paid debit card providers. Some companies have indicated that they plan to stay open and will try to offer short-term credit at the 36 percent rate of interest cap. Most credit providers will be shutting down, nevertheless. Within the state, about 1,000 jobs can be lost. The Arizona Operation Sunset representatives explained the Attorney General will be scrutinizing the terms and conditions of all short-term credit transactions.

Reality of personal loan companies in Arizona

Arizona’s Operation Sunset says that by forcing private money lenders 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 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 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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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