The Student News Site of University of Arizona

The Daily Wildcat

48° Tucson, AZ

The Daily Wildcat

The Daily Wildcat

 

    Payday loan companies face vote

    Payday loan companies face vote

    Payday loan companies have nearly 650 stores and employ 2,500 employees within Arizona. After the November elections, that could all change.

    “”You could sum up Proposition 200 this way: Should we reform the payday loan industry in Arizona, or should we eliminate the payday loan industry in Arizona (altogether)?”” said Stan Barnes, chairman of the YES on 200 campaign.

    The status of the economy just cannot afford for Proposition 200 to fail, he added.

    “”Most voters know that reforming the industry while preserving this choice as an option for people . . . is better than the extreme position of elimination of the industry,”” Barnes said. “”Especially in a down economy.””

    Under the current law, payday loan companies can charge $17.65 for every $100 borrowed. The most an individual can borrow is $500, which can lead to a maximum charge for borrowed funds of $88.25. Should Proposition 200 fail, it will effectively cause the closure of nearly all payday loan locations by July 2010, when the current law expires.

    Barnes said payday loans are an important option for younger audiences simply because they can resort to them. Should that option terminate, the demand will remain and force people to explore other, and possibly more dangerous, types of loans, Barnes said.

    “”The demand will go elsewhere – bouncing checks, declaring bankruptcy or Internet lenders, which are unregulated and can take advantage of Arizona consumers.””

    The proposition states it will offer alterations to the current repayment plan and also lower current rates.

    However, Kelly Griffith, deputy director of the Southwest Center for Economic Security, said payday loan companies “”can already do that and choose not to. The proposition is really smoke and mirrors.””

    Griffith said she would warn students against payday loans.

    “”I would say to students who are on a limited income that payday loans may look appealing,”” she said. “”But it can be very dangerous for students.””

    Natalie Lakosil, a pre-journalism sophomore, agreed.

    “”I think (students) will get taken advantage of and not be aware of the interest rate and exactly what they’re getting themselves into,”” Lakosil said. “”I think they should get rid of those loans, ’cause I think it’s screwing people over.””

    Barnes countered by saying the payday lending industry has thousands of Arizona customers not because people are too ill-informed to make their own decisions, but because they’re making a rational decision.

    “”They are looking at their credit options. . . . Having choices is good,”” he said. “”And people are responsible for their own well-being, and . . . as adults, (people) can make their own decisions.””

    Griffith said she felt payday lenders were taking advantage of the situation in the porous economy.

    “”All it is, is legalized loan sharking,”” Griffith said.

    Laura Dean, a retail and consumer sciences sophomore, said people should be more responsible for their money in general, but payday loans could be detrimental to the financial situations.

    “”It’s just another way for people to get in debt.””

    Arizona voters will decide the fate of Proposition 200 in the November elections.

    More to Discover
    Activate Search