High-interest payday loan lenders were kicked out of Arizona by voters in 2008. But now some state legislators are trying very hard to bring similar loans back to the state.
The loans are officially called Flexible Credit Loans, but Rep. Debbie McCune Davis calls them predatory loans.
"It is a new mechanism for the old payday lenders, the title lenders, to have one more tool in their tool box to get people into a debt trap," Davis said.
Car title loan places quietly took over the payday loan market. Now, the industry is looking to expand into offering loans that don't require collateral with Senate Bill 1316.
McCune Davis says it's easy money with lenders charging 200 percent APR, and setting up shop in the Valley's poorest neighborhoods.
"They don't have the excess income to pay it off, so they know they can keep these folks in debt over time," she says.
For somebody borrowing $2500, you're paying back $10,000 over 2 years or $425 per month.
The Senate Finance Committee killed it.
But it came back to life in the House, and passed the Ways and Means Committee with all six Republicans voting for and all the three Democrats voting against.
Senator John Kavanagh is especially insistent on making them available anyway. He sponsored the bill in the Senate and ensured that it would be resurrected as SB 1316 in the House.
"These are desperate people who need emergency cash," Kavanagh says.
Though he admits no one in his district, which includes Fountain Hills, is asking him to make these types of loans available.
Despite that, Kavanagh says he wants to make sure people have access to them.
"We're talking about people who have no credit and this is their last chance to get their car repaired or stave off and eviction from their apartment," he says.
But it's hard to find any other group on record, who supports the bill except for the loan companies themselves.
"I wouldn't' t take out the loan like this. But then again I have good credit," Kavanagh says.
McCune-Davis told ABC15 that she's seen first-hand what these loans can do.
'It doesn't help people. It simply creates a bigger problem for them," she said.
The bill is scheduled for caucus on Tuesday and could possibly be up for a vote in the House by Wednesday. We'll let you know what happens.
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