October 21, 2008

AZ Propositions - 200

Payday Loan Reform Act

"Arizonans use payday lending services everyday to meet unforeseen expenses and financial emergencies. The payday lending industry is set to be eliminated and the Arizona Legislature refuses to enact reforms to benefit borrowers while preserving this important financial option. This measure will bring dramatic pro-consumer reform to payday lending and preserve consumer choice. It includes a substantial rate cut, eliminates rolling-over principal to extend a loan, creates a repayment plan at no cost to customers that can't meet their obligations, and inhibits a borrower's ability to obtain more than one loan at a time." From SOS website [emphasis mine]

I used to think payday loan stores were just a nuisance that only hurt idiots that were stupid enough to sign up. After all, if someone is fool enough to pay 400% interest on a $100 loan, that's their problem.

A couple of things have happened lately to change my mind.

  1. The housing collapse, as well as the banking meltdown, have shown that people can be much more stupid than I gave them credit for - and they take the rest of us down with them.

  2. One of our on-call employees got one of these. Then he didn't pay it back. They sent us a lien, but he didn't work (or not much, anyway. They are seasonal and go weeks or months without being called) and he has a child support brandishment that gets first dibs, so we had no way to withhold the money. So the payday loan service took us to court to recover the money. That meant that M had to waste her time going to court to explain that he wasn't working enough for their levy to kick in. Now, had they bothered to verify his employment before giving him a payday loan based on his employment, they would have known it would be unlikely they could collect quickly (if at all). Several hours and lots of paperwork. That makes his, and their, stupidity our problem.

Proposition 200 is being billed as Payday Loan Reform, which is entirely misleading. If it passes, the loan sharks will have to reduce their interest charges from a top rate of 400% to a much more reasonable 391%.

If Prop 200 is defeated, payday loan stores will be reformed in 2010, when their ability to charge those exorbitant rates will expire.
If Prop 200 is defeated, the highest rate they will be able to charge is 36%.

Many states have outlawed these lending practices already, and I am ready to join them.

A "yes" vote shall have the effect of repealing the July 1, 2010 termination date for the existing "payday loan" licensing program thus allowing it to continue indefinitely, allowing payday loan licensees to provide electronic debit agreement services, prohibiting services over 35 days, requiring payday loan agreements be in English or Spanish, prohibiting certain fees, permitting only one payday loan transaction with a customer each business day, requiring a payment plan if requested by the customer, prohibiting arrangements with customers having outstanding repayment plans, allowing licensees to make other loans and requiring licensee applicants to maintain a minimum net worth of at least $50,000 per location up to a maximum of $1,000,000. [official]

Proposition 200 gets a NO.

Posted by Vox at October 21, 2008 12:39 AM | Arizona , politics

You’re story is, unfortunately, all too common. Payday lenders prey upon people who have no way of ever being able to repay their absurd 391% loans.

The payday lending industry is stopping at nothing to pass Prop 200. They’ve already funneled millions of dollars into AZ for glossy mailers and fancy ads.

They can’t run on the facts, so they’re trying to deceive voters. They are actually up on the air with a new TV ad that criticizes the payday lending industry (hey, at least they know how despised they are!). The ad actually informs voters that they should vote yes to do away with payday industry. In fact, a NO vote is a vote against predatory payday lending - a yes vote is a vote to keep the payday lenders and their 391% interest rates in business.

Payday lenders have unscrupulous lending practices, so a deceptive ad campaign should probably come as no surprise.

Vote NO on 200 and send the payday lenders packing.

Posted by: Noprop200AZ at October 21, 2008 01:07 PM