No More Payday Loans in Arizona after June 2010

Posted on Thursday, September 10th, 2009 at 5:29 pm in Cash Loan Info by State

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On July 1, 2010, payday lending will become illegal in Arizona. This is the outcome of one of the many popular votes taken on presidential election day, November 4, 2008. The residents of Arizona voted “no” on Proposition 200, which sought to extend the legal right of licensed lenders to grant payday loans in the state. Despite heavy campaign spending, the “yes” faction gained only 40% of the vote.

The consequence of the referendum is that from mid-2010, lending providers will be allowed to charge no more than 36% annually on any consumer finance products, including payday loans. Payday lenders will see this as unviable given all the overheads associated with lending out small sums of money to a large number of customers, as well as because of the relatively high default rate. There will be no more payday loans legally available to the people of Arizona, and a large number of residents with poor credit and below average incomes will have nowhere to turn for emergency financing.

Until then, you can still obtain an instant payday loan of between $50 and $500 in Arizona. You need to have an income of at least $1,000 a month from a job, or from another regular payment source such as Social Security or a pension. A bank account is also required. This is where you will receive the money if you apply online – then the money will be debited when it’s time to pay it back. If you get your loan from a cash advance store you’ll need a checking account so you can give them a check for the final amount as security.

The minimum loan period is 5 days, but the law doesn’t set a maximum duration. In accordance with industry convention, most lenders offer standard loan terms of two weeks or until the borrower’s next payday. You’ll have to pay a fee of $17.65 per $100 you borrow for each 14-day period. If you annualize this rate, you arrive at an APR of 459%. So, on a $100 loan you would be charged $17.65, while if you borrowed $300 the fee would be $52.95.

Arizona is one of a handful of states where your fee is taken out of the stated amount of your payday loan before it’s handed to you rather than added on to the principal. In other words, if you apply borrow the maximum $500, you’ll only receive $411.75. You can only have one payday loan at any time, but you are allowed to extend it up to three times. You’ll be charged a fee every time you do this, so if you roll over a $500 loan three times it will cost you a total of $282.40 ($70.60 x 4). Each time you extend your payday loan, you’ll receive a document in both English and Spanish that tells you how to seek credit counseling and financial education sessions in your area.

Top lenders in the Arizona area include:

Phoenix Payday
3219 East Camelback Road
PO Box 32
Phoenix, AZ 85004
(602) 467-3009
http://www.phoenixpayday.com/

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