In 2008 Arizona outlawed payday loans.  The main reason these loans were outlawed was high interest rates.  Interest rates as high as 400 per cent. 

Someone already in debt and unable to get a bank loan or other unsecured loan would go to the payday loan store.  They could get various amounts under various conditions.  Most cases however involved several hundred dollars which had to be paid back in 7 days.

See me next payday

Hence, the name payday loans.  Problem was, after 7 days most people could not pay back the loan.  They could then roll it over another 7 days and get a week’s reprieve.  However, the interest rate being so high meant most people just got worse off and continued to rack up debt.


Arizona legislature felt the people with the most need were being abused with unheard of interest rates.  Rich taking advantage of the poor in the guise of helping out.

No more payday loans

So payday loans were outlawed and many shut down.  Some switched to car title loans which were also high interest, but not as bad.  In the case of title loans, many people lost their car, but were able to walk away from the debt.  I do mean “walk” away because their car was repossessed.

Not to be deterred the loan companies have been struggling to get the old loan stores back up and running.  Unable to succeed they now want “Flex loans”. 

Flex loans or flexible credit loans don’t appear to be much improvement over payday loans.  The loan industry is now fighting for these flex loans in the state legislature. 

Lots of petitions

In order to get before the legislature they obtained hundreds of signed petitions.  People signing these petitions were not informed the interest rate would be over 200 per cent.

 Attorney General Mark Brnovich has been asked to investigate Arizona Financial Choice Association for misrepresenting the bills intent in these petitions. 

In response the loan representatives have stated these are an improvement over the old loans.  They cite a limit of $2500 per loan, 24 month maximum length, and maximum interest rate just barely over half the previous 400 per cent.

How much is that?

Let’s run the numbers.  What if I borrow the max amount of $2500 and pay it back over 24 months?  The advertised interest rate is 17 per cent, however this is a monthly interest, not yearly.


Turns out your payment would be $435.05 per month.  This amounts to $10,441.15 by the end of the two year loan.  That’s if you make all the payments on time and have no late fees. 

In my opinion this is highway robbery and the loan companies are criminals.  I certainly hope they don’t get the legislation passed.  Everybody needs a loan sometime and emergencies arise when we least expect.  But borrowing at these rates only leads down a deep hole with no way out.