Don’t Be Deceived—Vote "NO" on Prop 200

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AARP Arizona is part of a coalition of organizations called Arizonans for Responsible Lending. The coalition was formed to educate voters about the predatory payday industry’s "payday loan reform act", Proposition 200, on the ballot this November. 

Why Vote No on Prop 200?

• Prop 200 is the payday industry's ballot initiative, funded entirely by the payday industry at $9 million to date.
• The purpose with this initiative is to remove the 2010 sunset date that would force payday lenders to cap their loans at 36%, the interest rate for all other small lenders in Arizona.
• Everything else in the initiative is merely smoke and mirrors designed to trick voters into thinking it is real "reform". 
• Vote No on Prop 200 and force the payday lenders to play by the same rules as other small loan lenders, 36% for all. 
• If this initiative passes, payday lenders will be able to charge 400% indefinitely, without the legislature or the Governor being able to do anything about it.

Payday Lending in Arizona

• Prior to 2000, there were less than 10 payday loan stores, and the maximum amount of interest on a consumer loan was 36%. Today there are more payday loan stores than McDonald’s and Starbuck combined (770 and counting), and the average APR for a payday loan is 400%.
• In 2000, the payday industry received a 10-year exception to Arizona’s Consumer Loan Law, allowing them to charge 400%, over 10 times the 36% usury cap. This 10-year experiment with payday loans is set to expire in 2010.

Why Is Payday Lending a Problem?

• Payday lenders in Arizona charge 400% interest.  
• Since the loan must be repaid in full in a short period of time (generally within two weeks), payday lenders force borrowers to renew the loans time and again without being able to pay down the principal. This loan flipping forms the foundation of the payday business model, the debt trap.
• The typical payday borrower pays $800 to borrow $300, paying much more in interest than they borrowed. 
• 90% of payday lending loans are to trapped borrowers with 5 or more loans per year. 60% of the loans are to borrowers with 12 or more transactions per year.
• 1 in 4 payday loans go to borrowers with 21 or more transactions per year!
• Payday lenders cost Arizona borrowers $139 million a year in excessive fees. Because the major payday industry companies are based out-of-state, these fees leave Arizona—a doubly harmful impact on Arizona’s economy.

What Are Other States Doing?

• Fifteen states and DC effectively ban payday loans by enforcing strict across-the-board consumer loan interest rate caps (usually at 36% interest).
• Vote No on Prop 200, so Arizona can join the states with a 36% interest cap in 2010. 

Arizonans for Responsible Lending urges you to vote NO on Proposition 200.

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Other Resources

200isnoreform.com