Arizona is about to say goodbye to predatory payday lenders who issue loans with annual interests exceeding 460%. On Thursday a decade-old law will expire, capping interest rates at 36%. The predatory lenders begged to keep the law in force, but voters and the legislature just sat back and gave the industry a big, slow, deserved punch right in the face.
Arizona Attorney General Terry Goddard has pledged to go after payday lenders who do not abide by the new interest-rate cap.
“They are terrible loans,” said Susan Lupton, a senior policy associate for the Center for Responsible Lending, a non-profit research and policy organization. “They are absolutely awful. There has not been a new state that has authorized payday lending in years, and states are continually looking at ways to cut down shops or get rid of payday lenders altogether.”
The few payday lenders that survive are expected to switch to auto-title loans, where borrowers use their cars as collateral for loans with interest rates exceeding 200%. Thankfully, many of the borrowers the industry targets don’t own cars.
Payday lenders calling it quits [The Arizona Republic]