According to the Arizona Capitol Times, the Arizona House of Representatives has just passed a proposal that will permit payday lenders to offer a new high-interest flex loan product. Legislators voted 31 to 26 to approve Senate Bill 1316 on March 21, 2016. If the bill is approved by the Arizona Senate and signed by Governor Doug Ducey, payday loan lenders can offer financial products with an interest rate of about 200% annually.
The proposal, which was created by Republican Senator John Kavanagh and supported by Rep. J.D. Mesnard, also a Republican, permits online payday loan lenders to offer “flex loan” type lending at 15% to 17% monthly without collateral. That means a consumer who takes out a $1,250 loan will need to pay back $5,000 over a period of two years.
The just-passed legislation is a revamped version of a measure that did not pass the legislature last year. Democrats in the House adamantly opposed the measure, saying that it gave predatory lenders the go-ahead to return the state.
A few Republicans also opposed the bill. One of these lawmakers was Rep. Brenda Barton, a Republican legislator from Payson. She said that backers of the measure claimed that there were no options for people without credit.
However, according to Barton, credit unions also offer their members a payday loan alternative that charges a rate of interest below 15%. Republicans who supported the bill said no viable option existed for people who worked who were poor and had no credit.
The key Democratic opponent of the bill was Rep. Debbie McCune Davis of Phoenix. The representative made the following comment. She said, “There are stories circulating of offers being made in exchange for votes.”
While legislators received thousands of consumer letters backing the recently passed bill, most Democrats and a few Republicans believed the correspondence was bogus and not from actual consumers.