A move is afoot in the Arizona Legislature to perpetuate high-interest loans similar to the so-called payday loans offered from many storefronts.The payday loans, charging annualized interest of up to almost 400 percent a year, would be illegal after June 2010 without new legislation. The state's small-loan regulations allow interest of up to 36 percent, but the payday loan organizations said that is too low to allow them to make a profit.
An extension of payday loans was rejected by voters in November. Backers of high-interest loans had indicated that they would attempt to get the Legislature to find a way to keep them in business.
House Bill 2608 was sponsored by Rep. Andy Biggs, R-Gilbert. It would have allowed loans of $200 to $3,000, borrowed for no less than five months and sometimes for up to 24 months. The loans would carry a 10 percent origination fee, with a minimum of $15 and maximum of $75. Lenders could charge up to 4 percent per month.
That bill died in the House Banking and Insurance Committee on a 4-4 deadlock vote. It then was reborn in the Transportation and Infrastructure Committee, where Biggs gutted House Bill 2071, originally for photo radar and defensive driving school, replacing it with the high-interest wording from House Bill 2608.
The Arizona Republic reported that the legislation is being pushed by San Antonio-based Brundage Management, which oversees 220 loan offices in nine states under the name Sun Loan Co.
The paper said Brian Tassinari, a Brundage representative, said that he had not been able to talk with enough committee members in order to get the legislation passed. The Legislature's Web site shows the bill on hold.
The site shows these major provisions:
-- Loan terms that are between five and 24 months. For loan amounts up to $1,500, the length of the loan ranges five to 12 months, and up to two years for amounts over $1,500 and up to $3,000.
-- Minimum fee of $15 for each loan transaction; maximum of $75 or 10 percent of amount financed, whichever is less.
-- Fees charged on a daily prorated basis for the first 90 days of the loan, except that the first $15 is earned on the first day.
-- The charges would be 4 percent per $100 on the first $750 of the loan; 3 percent for $751 to $1,500; 2 percent for $1,501 to $2,250; and 1 percent for amounts of more than $2,250.
Opponents say the provisions are a form of predatory lending because they would result in an annualized interest rate of up to 113 percent.
If the legislation passed, they say, it would also allow the payday loan companies to be reborn in a different form.
Source:http://www.zwire.com/site/news.cfm
