Category: Arizona

  • PDLs in Arizona

    Business Week is reporting that payday loan efforts in Arizona are pretty much done.  A new bill was abruptly removed from the agenda Tuesday, and the committee’s chairman, Sen. Jack Harper, said “they never had the votes.”

    Arizona has 650 licensed payday loan stores.  Some will stay open offering car title loans, prepaid credit cards and check cashing.

    I don’t think you can fight demand.  The industry will find a way to serve customers.  This is a very similar situation to Ohio, where interest rates were capped at 28%.  The industry is still operating under an alternative law.

  • Amusing in Arizona

    In a blog on AZ Central, Laurie Roberts writes about the possible resurrection of payday loans.  It’s a conscending article, but it did not stop the newspaper from advertising payday loan keywords in the text of the article.

    “…payday loans and their 400% interest rate…”

    This comes down to the perception.  The newspaper will advertise payday loans b/c it means revenue, but they love to bash payday loans b/c that’s what people want to hear.  The general public does not want to stick up for an industry that’s making money.  Even Google gets harassed by consumer groups and they give everything away for free.

  • Arizona looking for alternative models

    Arizona lenders are trying to find an alternative product.  This would resemble a product that we see in Ohio.

    This is what I thought was interesting about the lender’s strategy:

    “They also are using a procedural maneuver of a “strike-everything” amendment that will be considered Wednesday by the Senate Finance Committee. That would strip the new language onto an unrelated bill which already has been approved by the House.

    That means just a single public hearing on the issue: If the committee approves, the bill goes to the full Senate and then back to the House to concur with the changes, with no need for an additional hearing there.”

    If the lenders can get a few concessions, here is what they stand to make:

    “borrowing $500 for two months, with a payment at the end of each month, would have to pay $37.50 for the origination fee, another $22.62 in interest plus the $10 document preparation fee, for total charges $70.12.”

    My calculations are closer to $73.72.  Here’s what the TILA box would look like:

    FEDERAL TRUTH-IN-LENDING DISCLOSURES

    ANNUAL PERCENTAGE RATE
    The cost of your credit as a yearly rate.
    115.4002 %    		 FINANCE
    CHARGE
    The dollar amount the credit will cost you.
    $ 73.32     		Amount Financed
    The amount of credit provided to you or on
    your behalf.
    $ 500.00     		Total of Payments
    The amount you will have paid after you have made all payments as scheduled.
    $ 573.32

    Payment Schedule: One payment of $285.66 is due on 5/3/2010. 

  • Arizona bill gives back to low income services

    Sen. Russell Pearce, R-Mesa, has proposed an amendment to House Bill 2370 that would cap rates at $15 per $100 borrowed, limit the number of loans a borrower can take out at one time, and give back 1.5% back to low and moderate income services.

    That 1.5% is something new.  I’m not sure if it’s a good or bad idea.  On one hand, if it works, do it.  On the other hand, it perpetuates the stereotype that payday loans prey on low income people; which is not true.

    You can read the article in the Arizona Republic titled New hope for payday lenders.

  • New bill proposed in Arizona

    Read more details in the Payday Pundit.

  • Quik Cash has a fight in Arizona

    Quik Cash is accused of filing collections lawsuits in courts far from where debtors live or take out loans in the state of Arizona.

    Arizona authorities think it made it easier to get default judgments in court b/c the court was far away from the borrowers.

    They’re looking for $5M in restitution.

    Read more in ABC15.com.

  • Arizona Gov. sticks up for payday industry supporters

    Governor Jan Brewer is drawer criticism for some of his “associates” helping the payday loan industry.

    Arizona Gov. Jan Brewer says “It’s not inappropriate that some of her political associates are doing work for the payday loan industry that could result in controversial legislation reaching her desk.”

    That’s more like it. You can read the full article in the Chron Business News.

  • Letting the dust settle in Arizona

    Arizona is sitting tight for the sunset clause, which will take into effect on July 1, 2010. Basically, if another law isn’t put into place the rates will cap at 36%.

    I’ve always been against treating these fees as interst, but that’s how people want to see it. One thing that we can agree on is that the industry cannot survive at 36%. Some other type of fee has to be added to the loan.

    I guess we’ll see what happens.

  • Were the Ohio and Arizona payday campaigns too deceptive?

    The question posed in this article: “Why do political consultants so often choose a deceptive argument when an honest one would do just as well?”

    Of course, hindsight is always 20/20, but there is something to be said about fanning the flames. You can’t say the campaign failed from a lack of effort. The PDL industry should be commended for their diligence, but they were beaten easily in both states.

    I’ve always felt that if the industry just told the public that the majority of the people that use the product do NOT want to see it go. I would love to get out of paying my electric, gas or telephone bill; but it doesn’t mean I don’t want electricity.

    One instance that I think was sketchy was the commercial starring the older, farmer with the red pick up bitching about the government. I concede that there is a personal freedom argument here, but getting all libertarian on the general public just doesn’t work that well.

    I’ve always felt the power of the industry lies in the numbers. By presenting the shear number of loans, you can make a argument that it’s a very desirable product. The numbers do not lie.

    One could also make the argument that it doesn’t trap people into a cycle of debt because borrwers are fully aware of how the product works.

    Once you try to hard to sell something, as they did in Ohio and Arizon, it can confuse the general public. I think “choice” was a big part of the campaign and that’s a good thing.

    Again, I don’t mean to sound like the Monday morning quarterback or placing blame.

  • Payday lenders lose in Ohio and Arizona

    The people have spoken. I’m not surprised that something as polarized as payday lending could make it through the popular vote. Let’s face it, payday lending has a image problem. This group is constantly being attacked by consumer groups.

    The majority of people drew a line a payday lending. In Ohio, many lenders are closing down. Cash Land is closing 1/3 of their stores (appr. 40 stores). Cash America is closing down 43 locations.

    Cash America said Wednesday the remaining Ohio locations will begin offering services beyond payday loans such as short-term unsecured loans governed by a different statute. Some locations also will purchase gold and operate as pawn shops.

    Arizona also suffered a blow when their initiative was voted down. Arizona’s payday lenders are not shutting their doors just yet. They still have unitl July 1, 2010 to pursuade legislators to do something.

    Is this trend?