Payday loan store licenses all just ended in Arizona. Payday loans no fax stores are shutting down right now. The financial reform bill needs only one more thing- Obama’s signature. Part of the bill will create a new consumer financial protection agency within the Federal Reserve that will regulate consumer lending, and there is concern that a fate comparable to Arizona payday lenders’ awaits all payday loan company nationwide.
Stores in Arizona closing
azcentral.com posted an article all about effects the percentage rate cap Arizona wants may have. At 36 percent interest, or rather, 36 percent annualized interest (on a two week loan), any loan lenders in Arizona are having a hard time keeping their doors open. 11 of 34 Check’N'Go stores that has pay day loan, check cashing, and cash advances, closed. 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. Studies have shown greater incidents of bankruptcy, bounced checks and debt collections after bans on payday credit.
The unsigned financial reform bill
The financial reform bill will make sure the Federal Reserve has a Consumer Financial Protection Agency that goes to work. The bill just passes in Senate and now needs Obama’s signature. The Federal government can be responsible for personal loan company 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 benefits from this?
Cash until payday loans will have to follow standards used by other lending, or some believe awful loans and high interest will be gone. The only problem with that is that it costs almost $14 to lend $100 of payday credit, and 36 percent APR only yields a couple dollars per $100 loaned. What will happen to those individuals who can’t get any credit without beginning on paydayloans when short term lenders are no longer in business?
More details accessible at these sites
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
