Arizona has let any loan company in the state to end with licenses ending recently. The state is also letting payday stores move out when they close their doors. Currently, the financial reform bill is awaiting the president’s signature. Most are concerned the bill, working with the Federal Reserve to regulate lending, will stop payday lender in the whole country.
Stores in Arizona closing
A recent article on azcentral.com highlighted the effects of the new usury cap, or percentage rate cap the state of Arizona has imposed. Payday loan companies in Arizona can’t keep any business with a 36 percent annual interest cap. Check’N'Go which has cash advances, check cashing, and pay day loans, has already had to close 11 of its 34 stores. With summer coming to a close, 100 Arizona employees could be out of work adding to the unemployed list. The stores left have to switch to car title loans if they want to stay in business. Studies suggest that closing payday credit is going to lead to much more bankruptcy, debt collections and bounced checks.
Information on the financial reform bill
The financial reform bill will make sure the Federal Reserve has a Consumer Financial Protection Agency that goes to work. The bill just passes in Senate and now needs Obama’s signature. The Federal government can be responsible for payday lending once that happens. If the rate cap were to be imposed nationally, the entire industry will fold.
Who wants the ban?
It is thought that consumers will no longer be trapped by awful loans and high interest, or at least money lenders will have to follow the very same standards applied to mortgages and credit cards to cash advance loans loans. Too bad it wouldn’t work since only a couple of dollars would be made off every $100 loaned and it costs $14 to lend $100. If short term lenders can’t stay open, what is going to replace it to help the people who need these so badly?
Discover more info
Further reading
AZ Central
azcentral.com/community/phoenix/articles/2010/06/27/20100627payday-lenders-quit.html
Consumer Affairs
consumeraffairs.com/news04/2010/07/payday_loans_finreg.html
