Four out of five Arizonans don’t like payday and car title lenders, and only 6% have a favorable opinion of them. That’s according to a new poll from Public Policy Polling, which found that the unfavorability of payday lenders stretched through partisan divides with 82% of Democrats, 79% of Republicans, and 80% of Independents.
Fortunately, in 2010, Arizona ended its brief experiment with payday loans, thanks to a ban on consumer loans with annual interest exceeding 36%. This was accomplished with the work of many organizations like Arizona Community Action Association and ProgressNow Arizona who organized communities where borrowers were winding up in a cycle of debt. This prohibition offered a huge relief, but it hasn’t stopped all of the predatory lenders.
For years, car title lenders have ravaged Arizona. Despite successful efforts in reining payday lenders, car title lenders still charge excessive interest rates and leave many borrowers without their main form of capital: their car. As of 2016, Arizonans lost $255 million per year to car title loans. Fees on these loans have led to the repossession of cars from working families; a terrible blow to people with jobs and school.
The Consumer Bureau’s new rule offers more protections for borrowers in payday and car title loans by requiring loans be affordable. Arizona PIRG says “this ability-to-repay standard is expected to reduce the harms of predatory lending across the nation overall by disrupting the payday and car title lending business model, which depends on trapping borrowers in long-term, unaffordable debt.” It’s a great step in protecting consumers but Arizona PIRG’s president Diane Brown also adds that, “Policy makers should now take additional steps — such as prohibiting triple-digit car title loans — to further prevent Arizonans from falling off the financial cliff.”