Payday loans on notice in ArizonaPosted: Updated:
Gone are the days of outrageous pay day loan interest fees. As of July first, which is three weeks away, payday lenders will have to either lower their rates-- or leave town.
Nestled prominently among the rows of retailers and restaurants on 22nd and Swan, payday loan stores beckon customers to stop in for easy access to cash -- with an expensive catch.
"I can't afford 435% interest." Neighbors are not pleased with their presence.
"I think there's a lot of people who use them for the loans and I think they get ripped off by doing it. My advice is, don't go there." Christopher Jackson would know, he speaks from experience, "I get social security, and a lot of times, it just isn't enough, so at the time I had a checking account, I borrowed money from them, but it's due when you get your check again."
Like many others, he says he fell victim to a seemingly never-ending cycle. That's one reason voters said in 2008 they wanted to put an end to the high interest rates offered by Payday lenders.
"On June 30, the 10-year experiment with high interest loans, payday loans, in Arizona is going to sunset," says Goddard.
Now, lenders will have to cap their interest rates at 36%.
Yet Attorney General Terry Goddard says consumers still need to be on alert for payday lenders seeking loopholes, "They find other ways to charge very high interest to consumers."
He says they could disguise them into an auto title loan, or they could use a middleman to charge a high fee for processing an application.
To crack down on these activities, Goddard has launched Operation Sunset, "Operation Sunset is going to have a toll free number, it's going to have a special site on the Attorney General's website, and lots of information for consumers."
Information that he says will ensure people don't fall victim to deceptive lending practices.
Goddard says the next step is to crack down on Internet loans.