Arizona has let any payday loan companies in the state to end with licenses ending recently. Payday loan stores are within the process of closing their doors all over the state and are moving on to different pastures. Obama’s signature is the only thing that the financial reform bill needs to pass. Many are worried that payday loans will become obsolete if the bill passes since the bill works with the Federal Reserve to regulate lending.
Stores in Arizona closing
azcentral.com posted an article all about effects the percentage rate cap Arizona wants could have. At 36 percent interest, or rather, 36 percent annualized interest (on a two week loan), any payday lender in Arizona are having a hard time keeping their doors open. Check’N'Go, one of the largest payday loan, cash til payday loan and check cashing franchises within the country, quickly closed 11 of its 34 locations. 100 Arizona employees count on this for their income and will no longer have a job by the time summer ends. The stores left have to switch to car title loans if they want to stay in business. After payday credit is gone, bankruptcy, bounced checks, and debt collections will go up dramatically as outlined by studies.
Financial reform bill
The Federal Reserve can 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 could be responsible for once that happens. Payday lending will no longer be a business if the rate cap used by Arizona were to be considered by Federal government for law.
Who will the ban benefit?
Awful loans and high interest being gone is what most believe is the best part, although the truth is that cash advances could have to abide by the very same laws as mortgages and credit cards now. Too bad it wouldn’t work since only a few dollars would be made off each and every $100 loaned and it costs $14 to lend $100. Since payday customers aren’t accessing first tier credit because they don’t want to or can’t, what is going to take the place of short term payday lending if they can’t lend and keep their doors open?
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
