PHOENIX (3TV/CBS 5) -- Arizona got rid of payday loans a decade ago because of exorbitant interest rates that preyed on low-income families.
Now, some Arizona advocacy groups are pushing to crack down on car title loans.
A few years ago, Phoenix grandmother Knoye Jackson had trouble paying her bills, so she took out a $700 car title loan to make ends meet.
"I just needed the money," Jackson said. "I needed to pay what I needed to pay so we're not in the dark. I didn't have a lot of options, so they were the only option when you're desperate and you're going to have stuff turned off."
Jackson now regrets taking out a title loan on her car.
She said the sky-high interest rate attached to the loan resulted in her paying back $1,500 over two years just to keep her car.
Car title loans in Arizona can carry an annual percentage rate up to 204%.
It's those high interest rates that have prompted a new push to change how car title loan companies do business.
There is a coalition of consumer rights groups working on it.
The groups include:
» Southwest Center for Economic Integrity in Tucson,
» SURGE Network in Peoria,
» Living United for Change in Arizona (LUCHA) in Phoenix,
» Our Voice, Our Vote in Phoenix,
They have teamed up on a new initiative to put on next year's ballot.
It's called the Arizona Fair Lending Act, and it would cap the amount of annual interest on title loans at 36%.
Matt Benson with Arizona's Financial Choice Association says that title loan companies serve a valuable purpose and driving them away would hurt a lot of hard-working Arizonans.
The Federal Reserve Board just released a report that said four in 10 Americans can't afford a $400 emergency.
"We're talking about people [who] don't have a bank, don't have credit cards, don't have access to any other kind of traditional financing," Benson said. "If this initiative eliminates this source of financing, you're going to push these people online, to off-shore lenders, to loan sharks and truly they are going to be at risk in that scenario."
Borrowers like Jackson are not convinced.
"It's not worth it at all," said Jackson.
The groups seeking to crack down on the car title loan industry need to collect 237,645 valid signatures by July 2, 2020, to put the issue on the general election ballot next year.
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