Payday Loans

Arizona Payday Loan Laws

Payday lending is legal in the state of Arizona. However, the Arizona payday loan laws have imposed certain restrictions on who can issue these types of short-term cash advances; only check cashers are allowed to offers such loan programs. Though the state laws have not made much effort to reduce the high Annual Percentage Rate that lenders usually charge on payday loans, certain other legal provisions have been enacted to protect the rights and interest of consumers. Following is a brief overview on some of those important provisions that every borrower must be aware of.

No Criminal Charges Can Be Placed

It is a very common practice among debt collectors and creditors to threaten borrowers who are not paying off their debts that they will file criminal lawsuit against them and have them sent to jail. It is very important for you to keep in mind that the Fair Debt Collection Practices Act applies in the state of Arizona also. It is completely illegal for debt collectors to harass you with such threats. Always remember, financial inability to repay a payday loan is not a criminal offence and you cannot be sent to jail for this. As per the Arizona payday loan laws, the maximum a lender can do is to file a civil suit against you; some possible consequences of which may include a forced bankruptcy (in the most extreme cases), wage garnishment as per court order, and other such things. The lenders have no right to seize any property that you own in order to recover their debt. They must follow the proper legal procedure. However, it is important to note that most Arizona payday lenders include the clause of wage garnishment in the loan contract that gives them the legal right to garnish your wages in case you do not make the repayment in time. Therefore, you must read the terms and conditions of the loan contract thoroughly before you sign it.

Applicable Collection Fees

Though Arizona payday loan laws have not imposed any minimum or maximum limit on collection fees, the different of fees that can be charged in this category have been specified. If the check bounces and the borrower fails to pay off the loan in full on the set due date, the lenders have the right to charge reasonable attorney’s fees (it is up to the lender to decide what is “reasonable”), Court Costs, and NSF fee.

How Many Times The Loans Can Be Renewed

One of the best things that the Arizona laws have done in favor of the borrowers is that it has strictly prohibited the payday lenders from renewal or rollover of loans due to nonpayment. It means no further interest can be charged and so the outstanding balance on your loan will not keep on growing. However, certain additional financial charges may apply.

How Many Outstanding Loans You Can Have At A Time?

The Arizona payday loan laws have also imposed certain restrictions on the number of payday loans a borrower can have outstanding in his/her name at one time; it must not exceed one per location. It means you cannot borrow more than one cash advance at the same location. If a lender offers you a second payday loan while your residential address shows the same location, you cannot be legally made liable to pay interest or other financial charges on the same, but you will still have the obligation to pay the principal amount.

Annual Percentage Rate And Finance Charges

For a $100 of cash advance that is issued for a period of fourteen days, the APR must not exceed 579% and the finances charges can be up to $22.22. As we can see, though the state laws have prohibited any rollover or renewal of loan, the APR is still unusually very high, not reasonable and fair at all.

Rate and Fees

The maximum processing fee that can be charged is 10% of check plus $10. In addition to that, the lenders are also allowed to charge $5 for ID card.

Loan Term and Maximum Amount Of Loan Lenders Can Issue

The loan term must not be less than six days and more than 31 days. The maximum amount of loan that a lender can issue must not exceed $400.

The state laws have made no specific provisions regarding repayment plan or cooling off period. If you find out that your payday lenders are engaged in unfair and illegal practices and are doing something against the Arizona payday loan laws, you can file a complaint with the Arkansas State Board of Collection Agencies.


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Posted in Payday Loan Laws, Payday Loans | 1 Comment »

One Response to “Arizona Payday Loan Laws”

  1. Robert says:

    Good points. Arizona State has restricted pay day lending programs for the check cashers only. Though the annual percentage rate is very high in Arizona yet the consumers are provided with some legal rights to save themselves from the dirty tricks of lending companies. Fair Debt Collection Practices Act is applied in the state of Arizona so the creditors can not do the harassment. No criminal case can be filed against the borrower who is unable to do the repayment in time. If you are going to take a pay day loan, it is very necessary to study the contract papers carefully before signing it up. Different type of collection fees can be taken by the creditors but it should be reasonable, however this reasonable amount will be decided by the creditor him/ herself. Legally you are not authorized to take more than one pay day loan at the same address. If the creditors issues you second loan at the same address, You will be liable to pay the principal amount only. The loan term and amount of loan is also specified in the state of Arizona, it will depend upon you to decide the best possible option for you.

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