Over 700 payday lenders across the state of Arizona charge up to 459 percent annual interest on loans that trap their customers in long-term debt, finds a new report from the Center for Responsible Lending. A ballot measure on which the payday lending industry has spent $9 million so far to market in the state as "reform" would only reduce the interest rate to 391 percent, and cancel the 2010 expiration of an exemption for payday lenders from the 36 percent cap that covers other lenders.
"Proposition 200 is not real reform,´ said Attorney General Terry Goddard, announcing his opposition to the measure. "It is a special interest ploy to indefinitely extend payday lenders' ability to charge up to 400 percent interest to our most vulnerable consumers. I urge all Arizonans to vote 'no' on Proposition 200 in November."
The CRL report found that Pinal, Mohave and Maricopa Counties have the highest concentrations of payday lenders. Payday lenders drain $91 million per year from Maricopa County households alone.
"Payday lenders generate most of their revenue by trapping customers in debt," said Leslie Parrish, senior researcher at the Center for Responsible Lending. "We've found that to be the case nationally, and today's report shows how much this system is costing Arizonans."
A typical Arizona borrower pays an estimated $516 in fees for a $325 payday loan and still owes the $325 in principal, the CRL report found.
Learn more about how high-cost payday lending traps Arizona borrowers.