The voters of Arizona voted to reject a bill (known as "Proposition 200") by a wide margin in the fall elections. The key feature of Prop 200 was the removal of a provision of Arizona State Law that disallows payday loans after July 1, 2010. The provision (known as a "sunset" provision) is part of a special law that payday loan industry lobbyists obtained in 2000 which exempts them from the state's usury laws. Those laws cap interest at no more than 36 percent a year.
The 2000 statute created an exception for fees charged in "deferred presentment transactions" (also known as payday loans) of up to $500.
When Arizona lawmakers enacted the 2000 statute they wanted to see how the new payday loans would work. So they included a "sunset" clause: The law self-destructs on July 1, 2010 unless renewed.
The rejection of Prop 200 is a big blow to Arizona Payday Lenders. However, the payday loan industry will continue to attempt to persuade legislators to amend the law and keep payday loan lenders in business after 2010.
Comments on this entry are closed.