High-Cost Payday Lending Traps Arizona Borrowers


View this document (PDF)

Published: September 16, 2008

  • Over 700 payday lenders charging up to 459% annual percentage rate (APR) for a two-week loan are located throughout Arizona; with the highest concentrations per capita in Pinal, Mohave, and Maricopa Counties.
  • A typical Arizona borrower pays an estimated $516 in fees for a $325 payday loan and still owes the $325 in principal. Overall, payday lending costs Arizona families nearly $149 million each year. Payday lending drains $91 million and $23 million from Maricopa and Pima County households, respectively.
  • Payday lenders will no longer be able to charge triple-digit interest rates when their exemption to Arizona’s 36% rate cap expires in 2010 unless Proposition 200 is approved by voters this November. This proposition only decreases the cost of a two-week payday loan from 459% to 391% APR.

We conclude that Proposition 200 will not lead to effective reform;
instead, its passage would mean Arizona payday borrowers would remain mired in the debt trap.