By Ashley Russell on June 7, 2011
.jpg.aspx?width=75&height=75) In July, 2010, payday loans became extinct in Arizona. The state voted on these loans and decided to remove them from their financial system due to their nature of charging many low-income customers an upward or 400% interest on their loans. Therefore, this new law change eliminated the use of these loans for everyone—not just those who abused them.
Advance payday loans have become a popular option for many who accrue debt and find themselves living from paycheck to paycheck. These loans allow the individual to receive a cash advance fast, generally with a low interest rate, with the promise of repaying it as soon as they receive their next paycheck.
This seems like a great idea, but it can turn sour fast. If it turns out that the individual cannot repay their loan on their next payday, then they quickly begin to accumulate late fees, which can be almost 36%. That is what brought about the change for Arizona. Many customers were falling behind on their payments and falling prey to the extreme late penalties from the lending companies.
Consequently, this new law change has a negative impact on those who used payday loans the right way. Those who have bad credit and low incomes will no longer have payday loans to fall back on when they need quick cash. The misuse of this system by both the lenders and the consumers has killed a system that was beneficial to many.
Arizona is the seventeenth state to eliminate this payday loans, and there are many more that are likely to follow. These loans appear to be too risky for both the lenders and the consumers, so they must be eliminated. However, without these loans, many low-income individuals may struggle to pay their weekly bills. These individuals must now look to other loans to offset this loss. |