The state of Arizona recently allowed the licenses of payday lending for the entire state to lapse. The state is also letting payday stores move out while they close their doors. The financial reform bill needs only one more thing- Obama’s signature. Most are worried that paydayloans will become obsolete if the bill passes since the bill works with the Federal Reserve to regulate lending. Article resource – The Arizona ban and also the financial reform bill by Personal Money Store.
Arizona stores closing up shop
A recent article on azcentral.com highlighted the effects of the new usury cap, or percentage rate cap the state of Arizona has imposed. Money lender in Arizona can’t keep any business with a 36 percent annual interest cap. 11 of 34 Check’N'Go stores that has payday loans, check cashing, and cash advances, closed. With summer coming to a close, 100 Arizona employees will 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 have shown greater incidents of bankruptcy, bounced checks and debt collections after bans on payday credit.
The new financial reform bill
The Federal Reserve may have a new Consumer Financial Protection Agency in it with the financial reform bill. Obama needs to sign the bill now that it has made its way through Senate. The Federal government will be responsible for payday loan companies once that happens. Loan company will no longer be a business if the rate cap used by Arizona were to be considered by Federal government for law.
Who wants the ban?
Cash till payday loans could have to follow standards used by other lending, or some believe awful loans and high interest could be gone. It costs $14 to lend $100 and with the 36 percent APR cap, only a couple dollars could be made off $100 loaned meaning the business would lose a lot of money. What will happen to those individuals who can’t get any credit without beginning on payday loans when short term lenders are no longer in business?
More information about this topic at these websites
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
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