Personal loan company licenses all just ended in Arizona. The state is also letting payday stores move out while they close their doors. Obama’s signature is the only thing the financial reform bill needs to pass. Many are worried that paydayloans will become obsolete if the bill passes since the bill works with the Federal Reserve to regulate lending.
Stores in Arizona closing
azcentral.com posted an article all about effects the percentage rate cap Arizona wants will have. Only a two week loan with 36 percent annual interest can be given out by payday lenders in Arizona making it hard to stay in business. 11 of 34 Check’N'Go stores that has payroll loans, check cashing, and cash advances, closed. With summer coming to a close, 100 Arizona employees will be out of work adding to the unemployed list. The stores left have to switch to car title loans if they want to stay in business. Studies have shown greater incidents of bankruptcy, bounced checks and debt collections after bans on payday credit.
Bill for financial reform
The Federal Reserve may have a new Consumer Financial Protection Agency in it with the financial reform bill. The bill just passes in Senate and now needs Obama’s signature. The Federal government could be responsible for payday lending once that happens. If the rate cap Arizona started goes out to the whole country, personal loan company will die.
Who’ll the ban help?
It is thought that consumers will no longer be trapped by awful loans and high interest, or at least loan company may have to follow the very same standards applied to mortgages and credit cards to cash til payday loans. Too bad it wouldn’t work since only a few dollars would be made off every $100 loaned and it costs $14 to lend $100. What will happen to those people who can’t get any credit without starting on pay day loan when short term lenders are no longer in business?
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Further reading
AZ Central
azcentral.com/community/phoenix/articles/2010/06/27/20100627payday-lenders-quit.html
Consumer Affairs
consumeraffairs.com/news04/2010/07/payday_loans_finreg.html
