Arizona Proposition 200 - Payday Loan Reform Act
Currently payday loan businesses are regulated by the State. This licensing program is set to terminate on July 1, 2010. Proposition 200 would repeal the program's termination date. The Payday Loan Reform Act would preserve this financing option for those who choose to use it, and also alter the procedures by which payday loan businesses operate including limiting the number and frequency of loans that can be made to one person and reducing loan fees that can be charged.
Click on "Read more" to see a synopsis of the pros and cons and find more information about this ballot measure.
Will you vote in favor of Proposition 200?
1) Yes, we need to continue to offer these financing options to our citizens while more closely regulating the industry. People should be able to make their own financial decisions.
2) No, payday loan businesses are predatory lenders that exploit the financial hardship of people with limited resources. We don't need them.
Advocates of Proposition 200 say that: "When it comes to money, credit, and borrowing decisions... people in Arizona need more options, not less. This Proposition will make sure payday lenders are tightly regulated, more consumer friendly, and remain available to serve those people who need a small, simple to understand, short-term loan." "This measure will bring dramatic pro-consumer reform to payday lending and preserve consumer choice."
Opponents of Proposition 200 say that: "Arizonans have to pay interest rates on payday loans that far exceed the usury rate of 36% for all other loans in the state. This initiative would make 391% interest rates a permanent reality here. Other states have been successful in protecting their citizens by forbidding payday lending at triple-digit interest rates, and Arizona must follow suit. Payday lenders have had free reign in Arizona because of a 10-year exemption from the state's 36% usury cap that the Legislature granted in 2000. Now they are using this initiative to try to extend the exemption indefinitely."
UPDATE: Proposition 200 failed with 60% of the voters voting no.
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Comments
As I understand it, the ballot has been worded so people think a ‘yes’ vote will have a positive and beneficial effect on our citizens when the opposite would be true. A ‘no’ vote will actually keep interest rates at a somewhat manageable rate and bring some relief to those people who can least afford predatory lending.
Payday loans are no different than legal loan sharks.
Do not believe that the high APR shown on the paperwork has anything to do with how much the payday loan will cost. Federal regulations require the fee be handled as interest, and as such the paperwork must show it as an APR. This figure is backed into based on the fee amount given up front(incidentally limited to 15% of the principle by prop 200) and the length of the loan. With a fixed ‘interest’ amount, the APR will be incredibly high for these 1-3 week loans, but irrelevant to the cost of the loan. It’ll still be at most $15 for every $100 borrowed.
There is nothing wrong with the Payday loan companys, if the are being used properly. If the banks are not willing to help the people that don’t have perfect credit they need to get help some where.
This law is a good thing because it helps the customer by regulating the applicable finance charge, allowing for payment plans, and restricting how often a person looking to get a loan can actually have one. The lie behind the triple digit apr rate (which incidentally is 391.07 at 15%) is that this rate is how much one would pay in finance charges if one had the loan every two weeks for an entire year. The reason new legislation needs to be passed is not because these places are “evil”, but because vague wording of current laws have allowed for larger finance charges then 15% and there is no system in place to verify that a potential client does not already have a payday loan (also something this law would change). While a customer can be told it is illegal to have more than one payday loan, if they say that they don’t, there is nothing a payday loan teller can do about it. This is a good proposition and payday loans can be good with the help of these new regulations. This proposition will keep people from abusing the system and keep the system in check, which are the the things that most people feel are wrong with payday loans in the first place.
If payday loans are legal loan sharks, then credit card companies are, as well. They give you money then require you to pay it back with interest. What’s the difference? With credit cards you have to have good credit, so some people would never get any help at all. Now banks charge an over draft fee on any dollar amount over what you have in you account. For example if you over draft your account for a penny, they charge you $38.00 and that is equal to 3801% interest. At a payday loan company you could get an advance for $50.00 which is only a fee of $8.83, saving the consumer $30.00, to cover that overdraft. In the state of Arizona the consumer is charge a flat fee, not interest but the payday loan industry is required to show what the annual interest rate is equitant to. Then there are the banks that charge a fee for every day that the account is over drawn, bringing the account deeper in the hole. Banks and credit card companies get away with adding all of these extra charges but they are not being threatened or forced to close down. If banks and credit card companies can stay in business then why can’t payday loan companies, there is no difference. How are consumer’s supposed to survive in the economy today with everything (bank fees, interest, gas, food, medical and electric) all rising but our paychecks staying the same. Us middle class people need help sometimes and payday loans give us that extra help we need, which banks will not do with out perfect credit.
I agree with what Bobbie has said. I have something to add, what will happen to all the employees at these PDL companies. If Prop 200 is voted ‘NO’ then over 2500 people will be out of a job. The unemployment rates are the highest they have been in 7 years. The economy is so bad now, that people can not find jobs (no one is hiring) Most people need to to have two income families. It is almost impossible to get government help even if there is only one provider. The poverty line is $12,000. If you make more than that, you’re SOL!!!!!! I feel for the emplyees of the PDL comanies. They are getting a bad rap, when all they are doing is providing a service to the middle class that is needed. And, they are making a living to provide for their families, spending money and trying to do their part on keeping the economy going. The people that are against the PDL comanes are 2 types. 1) the people that have never had to use them, and 2) the people that have taken out loans, and don’t pay them back. Be grown ups and take responibility for you actions and stop blaming the PDL’s for your mistakes.
Why doesn’t anybody ever talk about the default rate on these small consumer loans. Are people too short sighted to understand that the rates are based on an industry average of 25% default on these loans? Its unfortunate that the people who have good intentions pay the price for those who don’t pay. Its simple economics, Lord knows there’s plenty of competition to regulate these rates.
If you have a problem with the payday loan companies don’t use them, its not hard. These companies have been helping people when they need it for a long time. You talk about them being legal loan sharks but when I needed a new tire for my car and the bank wouldn’t approve me for a loan because I have less then perfect credit I went to a PDL and they gave me the help I needed. If you use them the way they are intended to be used then they are a very good place to have around.
Vote No will let the 10-year exemption cap expire in 2010 and the interest rate the Payday Loan industry only can charge will drop to the 36% usury cap. It’s a no-brainer.
Voting Yes will extend indefinitely the triple-digit rate along with some sugar-coated fluff to convince you to vote yes.
Will let me tell you I had a couple of payday loans, and when you go in to pay a loan off, they want you right away to go and get another loan. They tend to put pressure on you even if you don’t want another loan. So I agree, they are predator, almost like they are trying to reach the quota of the day. So they can get a big raise. That’s not customer services if they are trying to push you into another loan when you have just paid off a loan.
I got a phone call today asking me to vote ‘yes’ on Prop 200. When I asked a question in response to what they had said, I was hung up on. The called said a ‘yes’ would reduce PDL rates and I asked ‘how much will they be reduced?’. If the Prop 200 people can not answer a question and feel hanging up is proper, then I feel it is proper to vote ‘No’ on the bill.
Voting yes will lower the interest rate to 15%. That is lower than most credit cards.
What everyone does not realize is that a no vote will end payday advances in Arizona permanently. If you have perfect credit and never need any extra cash then good for you, don’t use the service, but why take away the availability for someone else who may need it. Not everyone has perfect credit and not everyone has good luck. If your car breaks down and you live payday to payday, most likely you don’t have any money in savings to fix that broken car. So where do you go then? Who are you to tell someone else they can’t get an advance if they need or want to? Isn’t that what freedom is about, the right to chose.
As to Ina’s comment about being pressured into another advance, you are doing business with the wrong company. They are not all like that. I am speaking from personal experience. I work for one of these companies. Yea, you can say I am bias but I see customer’s everyday with one problem or another (sick kids, car problems, short paycheck, rising gas prices, high utility bills, home repair, etc…). What is the average person to do?
One last thing, if you vote no on prop 200 you will be putting 2500 people out of a job in the state of Arizona. Not only are you affecting the people who borrow but all of the employees as well. With the economy the way it is, good luck to everyone who works at one of the companies in regards to finding another job.
Read it!!!!!
http://www.affr2008.org/pdf/proposition_200_the_payday_loan_reform_act.pdf
The Arizona Credit Union System would be very happy if payday advance companies shriveled up and died in the Grand Canyon State, but their opinion is certainly greased by the wheels of their own commerce. The credit union is stepping up its lobbying efforts to crush the competition and absorb all the former cash advance customers into their coffers. In a massive E-mail campaign that they estimate will reach as many as 1.6 million credit union customers, System will encourage voters to give Proposition 200 an emphatic thumbs down. On the flip side of the coin, Prop. 200 supports organizations like the Arizona Community Financial Services Association that claims that Proposition 200 will indeed lower state loan fees, eliminate extensions by introducing flexible payment plans, regulate Internet lending and cull the number of total walk-in stores in Arizona. These very real reforms will not only help payday loan customers, but will keep industry employees off the breadlines past the current lending sunset year of 2010. Who wants to lose their job, particularly in our current economy?
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Everyone who left a comment above asking for a yes vote is a payday loan employee. They pay their employees to across the country to participate in discussion groups because there is no way on Earth someone who gets financially raped is going to come out in support of the rapist. These people know they’re getting screwed, but they think it’s better than the alternative.
A no vote on this proposition is the better alternative because they will be capped at 36% APR in 2010 and beyond. We hear most will go out of business. Some will find work arounds. But at least the vicious cycle will end (which is why people like me insist on referring to it in APR terms, because many times it’s not just 1-3 weeks. It can drag on until someone bails them out or their credit is ruined.
Have you seen the new commercials by the way?
Payday loans suck, they’re horrible, they cheat Arizonan’s, vote yes to reform them. PLEASE! Prop 200 is absolutely not a reform measure at all.
Sincerely,
No on 200 Volunteer
I am so tired of hearing about how people think payday loans suck and are so bad, if you people don’t like payday loans DON’T use them. Stop tring to take away the rights for other people to use them. And by voting No will close them down in 2010 not reform them. I AM NOT an employee for a PDL company, but I have used their service and I don’t think that there is a problem with the way they do business. So to all of you who have no idea what is going on with prop 200 and the PDL companies shut the hell up!!
I say vote YES on 200.
sallad4 if you don’t like payday loans then why do you use them. Who are you to take my rights away? I should have the right to get a loan if I want or need one and so should everyone else. You are one of those people who want to control everyone else’s life because you’re not happy with your own. WELL BUTT OUT!!!!!
Yes, I do work for a payday loan company; no I don’t get paid to respond to any of these discussion groups. I do it because we all should have the right to make our own decisions about our own personal finances. I have also use payday loans in the past, and had no problem because I’m a responsible adult. You need to find something better to do with your time and get your nose out of other peoples business.
VOTE YES ON 200
I wish people would stop bitching about PDL companies. If you don’t like the way they do business then don’t use them. You know there are alot of places I don’t like, like McDonalds but I’m not trying to close them down, I simply don’t eat there and it is that easy. So stop trying to be dictators of the world and mind your own business. You people need to worried about the voting of our next President. Obama is what people should be worried about he is the one who will do damage to our country not the PDL companies.
Wow Liz! Perfectly said!
So sallad4, how many PDL’s have you gone bad on????? There are a few banks that I know of that offer Direct Deposit Advances. AND, why are there sooooooo many banks going under???Are they too Rapists????? I ask why are the PDL companies are the ONLY ones getting a bad rap??? Banks, credit cards, auto title loans, and pdl companies are the same thing. A short term money fix for the bad economy. PDL companies are NOT the reason people are going broke. The damn economy sucks. But, obviously not for you since you have time and the money to volunteer for such a rediculous cause.
The PDL industry has invaded our communities with an office on most every corner. They say over and over of how they have helped those in need. They have misled the public with deceptive campaign advertising and salted these blogs with input from their employees. I have yet to hear from a customer that they would be devastated if they were gone, but I have heard from many previous PDL customers of how they became devastated after using them.
Michael, as I have commented above I have used a PDL company when I needed a tire for my car and the bank wouldn’t help me, so yes it would be devastating if I didn’t have that option to use them IF I ever needed to use them again. I do agree that they need to limit how meny of them there are in one town/city, but to get rid of all them would hurt alot of people that can’t get help from the bank.
The Payday Loan Reform Act would give payday lenders free reign to charge outragous interest rates to Arizona consumers.
Written by the payday loan industry’s lobbyists and lawyers, this act would create an indefinite, voter-protected mandate for interest rates of 391 percent or more on small-dollar consumer loans.
Arizona law places a 36 percent usury cap on consumer loans. For the past eight years, payday lenders have used an exemption to exploit Arizona consumers. If a majority votes no on this initiative, that exemption will expire on July 1, 2010. If it passes, the exemption becomes permanent.
Payday lenders should no longer be allowed to charge more than 10 times what other lenders can charge. Arizonans should have access to small-dollar loans at reasonable rates and be able to hold on to their hard-earned wages. This can only be accomplished by voting no.
*****This is the most rediculious prop I have seen. You should be going after Credit Card companies and bank fees if you are going to put regulation on anybody. Guess who is paying for all the adds for this prop to pass. That is right, Credit Card companies and banks. We should reduce the credit limits (Like other countries have done) from $5,000 and upwards of $20,000 to $250 to $750 like Payday loans. Also, Payday loans charge less interest than Credit Card company late fees and Bank overdraft charges that are 50% and up to 3000%. DON’T TAKE COMPETITION OUT OF AMERICAN BUSINESSES! If Payday Loans are such a bad deal then warn Americans and let them decide for themselves. If you regulate one business but not others, you will create an unfare playing field. This will only give Credit Card companies and Banks more of a reason to continue businesses as usual. Make them compete by not passing this prop. Let’s do it the way America intended to be.
I in particular will vote NO. I believe it will be in the best interest. People dont really need pay-day loans. Like Jerry said it is pretty much legal loan sharking we need to put this to an end.
People who are against payday loans have obviously never had to use them. When your back is against the wall and you have no one to turn to a payday advance may be your only option. Besides, I am fully capable of making my own financial decisions and I don’t need the government taking away any options that may one day help me out.
Vote YES on 200 to keep your freedom to make your own financial decisions!!!!!!!!!
I agree with just about everyone on here. While I think that PDL establishments can become quite hostile or shady, I think that they are a necessary evil, if even that. Honestly, I don’t understand, if you borrow $300 dollars and you know you can’t pay it back, why borrow it? It’s common sense if you read the terms. You should know if that is needed. Yes, we have needed PDL and it did become a cycle of constant borrowing, but we got out of it, and we live to tell about it. If you borrow, from any institution, you need to make sure you have the means to pay back. If I need money NOW, why would I wait for a bank to approve me when I can get the money I need right away. Given that I can pay it back. That’s the key people, paying it back. PDL may seem evil but I don’t know how many times it has saved my butt and I am not in debt to PDL but definitely to Student Loans and Credit Cards!
If the banks won’t help when we need it then some one has too. By voting yes on prop 200 it will make it better for the customer and the consumer. So Vote YES ON PROP 200
We do NOT need loan sharks in our state. It is not right for these payday lenders to take advantage of the needy. People need to learn to take responsibility for themselves and tighten their belt if they need to.
Get the predatory lenders out by voting no on 200.
Payday loan places are urban blight popping up on every corner and the majority of people that use them are degenerates. you stand in the lobby of one of those crappy establishments for 10 minutes and see the kind of scumbag clientale they attract.
In the past and in another state, I’ve used finance companies similar to the “pay day” loan companies that are so prevalent. I would get a $500 loan and it would cost me $650 and change if I paid it off within the term. That term was not in years, it was in weeks. The interest you pay on that is un-freakin-godly (if you do the math is roughly 400%). That’s what in the area of what payday loans charge. I’ve read a summary of the “legalese” and it doesn’t mention limiting to 15% or anything of the sort.
Here are some highlights from wikipedia:
- The payday-loan industry, which faces elimination in 2010 when an enabling law expires, would have its right to practice in the state extended indefinitely.
- Fees payday lenders are allowed to charge would drop from $17.65 to $15 on a $100, two-week loan.
- Lenders would not be permitted to roll over the principal into extended loans and would have to offer consumers repayment plans
What it means:
- That’s an indefinite extension – that’s kind of scary.
- That’s not a reduction to 15% but a reductino of $2.65/$100 (if they were a bank, making $15 every 2 weeks on $100 would require charging a rate of about 430% APR)
- Payment plans can be limited to being offered only once per year. That sucks for anyone who has more than one loan that gets away from them inside a year
They say that it would be a financial blow to the economy. I don’t think so. It cold be argued that legalizing heroin and allowing people to sell it on the streets would help the economy by increasing money flow but the damage that could/would be done would far outweigh any nominal benefits. I’m of a mind that payday loans, if you take away all the window dressing, are a similar situation.
And I will not use them for any reason. I’ve learned my lesson. In my opinion, pawn shops are bad,but pay day loan companies are criminal.
That’s my thoughts anyay.
Americans just need to learn to live in their means. especialy the way our economy is today, people dont need another reason to be stressed. these pay day loans are a dangerous cycle. WE DON’T NEED THEM!
I am not a Degenerate for using PDL. Some of us loose jobs get sick or run into trouble. The truth is I hate Payday loans because they are a crappy out when you are desperate but they have bailed us out. What sucks is we are still limited in options. There should be a better way to repay if We run into problems. Better regulation is necessary. The Prop sucks either way. If you vote no you loose something completely. If you vote Yes they still do not have a very clear set of restrictions or guidance to make them more manageable.
VOTE NO! The fact that this prop is being sold as “reform” when in reality it’s an sneaky way stay in business should be enough to let people know just how shady these guys are.
Wow, I can’t believe the number of Vote “Yes” on here. If it wasn’t for others mentioning that payday employees are being asked to pepper the blogs/boards with support for the prop, I’d be very confused.
Payday loans cause those that are in bad financial situtations to dig themselves in deeper holes. If a working stiff couldn’t afford a basic necessity without a payday loan, then he will be even worse off in two weeks when part of his paycheck has to go to pay ridiculous fees.
People should be free to make their financial decisions, but laws are there to protect people from being conned. Most of the time they are misinformed or do not understand what decision they are making. It’s like selling coke on the street corner with a sign that says “this will make you feel good (and we know you feel bad right now)” If you aren’t educated about drugs and addiction, this is too hard to pass up.
To all of you who keep saying we don’t need payday loan companies their evil you are stupid!!! If you don’t like them don’t use them stop taking away rights for other people to use them. What gives you the right to call people scumbags just because they need a little financial help, not everyone can get help from a bank. Just because you may have the money to do what ever you want when you want doesn’t mean the whole world does and if you are so worried about everyones financial needs why don’t you start helping those in need, stay away from the pdl if you don’t like them and stopn trying to take over the world dumbass.
My biggest issue is why are the PDLs trying to deceive the public?
A) The commercials are obviously misleading.
B) Everything they are proposing, they can already do.
If they were serious about reform they would let the people who take out the loans come up with the changes.
When it comes down to it, it’s all about money. Owners of these PDLs have now come accustomed to a certain lifestyle. One in which their employees don’t share. Everybody needs to wake up! Let’s keep them around but make them a reasonable option for people who want to use them.
I’m an IT tech here in AZ for a PDL and Check Cashing Company. First off, my company never pushes or pressures any customer to take out a loan, renew a loan or extend a loan. The fees are never hidden and are alway’s explained to the customer before any papers are signed. People need different services in life. If you don’t want a loan then don’t get one! but there are people out there who do need them.
I may no agree with rates that companies charge but I also understand that it’s business and a business can not grow without profit. We would not be in business if we offered “free” loans.
I have used PDL’s before and I’m glad I got out and stayed out, though it is a huge struggle with each day. I’m always tempted to go back when I’m hit with something I can’t seem to find a way out. I have some loved ones who have been stuck on them for over 4 years now. They are so deep they can’t see anyway out.
Just because the PDL’s have found a way to profit on the poor and make it sound like this is the only option, it is far from the real truth. Now the playing field has been leveled to be the same for all, let’s make better choices and opportunities for the people. PDL’s adhere to the changes of Prop 200 and make a difference if you really mean what you say.
I like the commericals because my son, daughter-in-law and grandchildren were featured!
I voted no on this prop. because it disregards the fact that people have enter into these contracts willingly and with full information. Personal responsibility can not and should not be legislated.
Well congrats to all of you stupid morons. You just took one more right away from me and everyone else. I hope karma bites you all in you nosy asses.
Bobbie…
Exactly which “right” did I take away?
Just wondering.
Thank you to all the jerks that voted no, thanks to you I will no longer have a job to support my family and I will be another unemployed american in this economy that sucks. If you don’t like PDL don’t use them why make everyone lose their jobs and right to choose just because you want to rule the world.
Fogglethorpe, the right that was taken away is: to choose if I want or need a PDL. Since Prop 200 did not pass, that means that we no longer have the “right” to go to a PDL company after June 2010 if we choose to do so. June of 2010 is when the Sunset Law ends, and that is when we will no longer be able to have PDL’s in AZ. Unfortunate, because there is a double-egded sword. I myself currently have a pdl because of a medical bill that had to be paid before my daughter could be seen. I chose to take out a pdl because I could not afford to overdraft my account. If I had chosen to pay the bill from my account, and the other smaller pending bills had hit my account, there would have been not only one od charge but, 4 od charges. This is because the bank always puts thru the highest amount first, then they take the smaller amounts. They purposly do this so they can charge you the od fees. That is how they make their money. It would have cost me $160 in od charges, when I only had to pay $17 for barrowing the $100 I needed from a pdl company. That is a total of $117 that I had to pay back. It may seem odd but, I chose the $117 over $160. It saved me $43. I hope that I may need the pdl services again but, it was there when I needed it.
It is not a secret anymore that our country is facing economic crisis today, with this situation it is not practical to eliminate financial options of the consumers. Some politicians in the government are looking forward to eliminate the payday loan industry because of the so-called predatory lending. However, getting rid of this would violate the financial freedom of the people. Predatory lending is only a mere allegation because they say that the APR is said to be so outrageous. Have you compared the APR of a payday loan with the APR of a bounced check, credit card fees or even a utility bill? Look at this:
· $100 payday advance with $15 fee = 391% APR;
· $100 bounced check with $48 NSF/merchant fees = 1,251% APR;
· $100 credit card balance with $26 late fee = 678% APR;
· $100 utility bill with $50 late/reconnect fees = 1,304% APR
What do you think is the better choice?
Thank you Lisa P. I absolutley agree iwth you:) That is what I have been trying to convey to all of the people against PDL companies.
I believe that payday loans take advantage of the less fortunate and perpetually keep them in a financial crisis by charging outrageous interest rate and fees. Hopefully a better solution can be found that will be beneficial to everybody.
I don’t get paid to respond to any of these discussion groups. I do it because we all should have the right to make our own decisions about our own personal finances. I have also use payday loans in the past, and had no problem because I’m a responsible adult. You need to find something better to do with your time and get your nose out of other peoples business.