In the state of Arizona, payday lending is prohibited.
Traditional payday loans became extinct in Arizona in July 2010, when the law that had permitted payday lender operation in the state, expired. Now, all the lenders wishing to operate in the state should adhere to 36% APR small loan cap.
Arizona Payday Lending Statutes
According to Ariz. Rev. Stat. 6-632., there is a ban on payday lenders restricting businesses operation in the territory of the state unless they comply with the 36% usury cap.
Rates, Fees and Other Charges in Arizona
A licensed lender is permitted to secure finance charges on consumer loans which they issue, that are no more than the amounts outlined below:
- In the case of loans with an original principal of less than or equal to three thousand dollars, a loan rate of thirty-six percent may be applied.
- In the case of a consumer loan with an original principal of greater than three thousand dollars, either:
- A loan rate of thirty-six percent on the first three thousand dollars of the principal, along with a consumer loan rate of twenty-four percent on that portion of the principal that is above three thousand dollars.
- For loan rates on single blended consumer loans that arise from the total amount financed. (Rev. Stat. 6-632.)
More information about payday loan laws and regulations in Arizona can be found on the official website of the Arizona Department of Financial Institutions (AZDFI).
If a consumer encounters fraud, the suspicion of operating without a license, or improper conduct by a payday lender, they may file a complaint through submission of a complaint form to the Department of Insurance and Financial Institutions.
Regulator: Complaints & Information
Arizona Department of Financial Institutions
Number of Arizona Consumers Complaints by Topics
According to CFPB Consumer Complaint Database
- Fraud and threat ( 96 )
- Not exiting debt ( 84 )
- Charges from account ( 81 )
- Lender is not available ( 23 )
- Loan to return ( 22 )
- Credit rating ( 22 )
- Not requested loan ( 16 )
- Loan not received ( 7 )
The History of Payday Loans in Arizona
- Before 2010 – Payday lending was legal in Arizona. Loans could be taken for 5 days and more with the maximum loan amount of $500 and 459% APR on a 14-day $100 loan.
- 2008 – Arizona Proposition 200, also known as the Payday Loan Reform Act was defeated. The proposition was backed by the payday lenders of the state and was aimed to return payday lending practices back into Arizona. However, there weren’t enough signatures in its support. Its defeat allowed payday lending to stay effectively prohibited.
- 2010 – After the expiration of the law exempting payday lenders from 36% APR cap they could either comply or leave. Thanks to a 2008 ballot initiative and the expiration of the law a great number of payday loan companies seized their operations in Arizona. Much of them also left in the result of the Operation Sunset, initiated by State Attorney General, that aggressively pursued violating lenders.
- 2010s – Despite the 36% cap, two of Arizona’s national banks (Wells Fargo and US Bank) offered advances to the customers with direct deposits with ~365% APR. CheckSmart was punished for selling gift cards with a credit option of 360% APR.
- 2017 – There was an attempt to revive payday loans by opening up “Consumer Access Lines of Credit“, or “Flex loans”. However, the attempt was unsuccessful, the legislation didn’t pass, and loans with a 0.45% ‘daily transaction fee,” (=164% APR) didn’t return. Luckily.
[Updated As of February 2020]