A state lawmaker who fought to rid Arizona of payday lenders now wants new caps on the title lending industry.
Sen. Debbie McCune Davis, D-Phoenix, who was instrumental in creating a law approved by voters capping interest rates at 36 percent for payday lenders, now wants that same rule to apply to title lenders.
But Scott Allen of the Arizona Title Loan Association says that can't be done, arguing higher interest rates are essential for business.
"If you borrowed money, $1,000 from me, for two months, and you came in and paid it off after two months, and I charged you $60, think of the math on how that would work. OK?"
McCune Davis said that's the wrong way to look at the issue, and that high interest loans shouldn’t be given out.
"The question isn't how much should somebody charge to make it profitable. The question is how do you ethically make a loan to somebody and actually give them a fair chance of being able to repay it?" she said.
She said if there is really too much risk to lend at 36 percent, then perhaps the loan should not be made. But Allen said if Arizonans can't borrow from licensed title lenders they'll simply find the money elsewhere.