State Capitol News
Sun August 24, 2008
Judge to Rule on Payday Loan Initiative
By Howard Fischer
Phoenix, AZ – A judge will decide whether voters need to be told up front how much payday lenders could charge if Proposition 200 is approved. Arizona Public Radio's Howard Fischer reports.
The law creates an exemption for payday lenders from the state's
usury limit of 36 percent. They can charge a fee of $17.85 for
every $100 borrowed for up to two weeks. That exemption will
expire in two years -- and payday loans stores will shutter --
unless voters approve this industry-finance initiative. State
Rep. Debbie McCune Davis said the proposed summary of the measure
which appears on each ballot does not inform voters that passage
of Proposition 200 would still allow interest rates of 391
(Tat clarity is essential for the voters to really understand the
difference between the exorbitant interest rates that the payday
lenders are charging and the 36 percent interest rate cap in the
consumer loan act.)
But payday loan indusry spokesman Stan Barnes said adding the
interest rate figure would only mislead voters.
(People are not paying an annual percentage rate on their money.
They're paying a one-time fee, much like a bounced check fee. And
if bounced check fees were expressed in annual percentage rate
terms then we would have an apples-to-apples comparison of the
cost of a short-term loan.)
Judge Sam Myers promised a ruling by the end of the day.
For Arizona Public Radio, this is Howard Fischer.