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Arizona House Approves New Consumer Loans With Interest Rates Up To 204 Percent

Without a vote to spare, the state House voted Monday to allow lenders to charge interest rates up to 204 percent.

State law caps legal interest on loans at 36 percent a year. Industry lobbyists have been angling for a new exemption from that limit since voters killed payday lending nearly a decade ago. These new loans could be for up to $2,500 for two years, at an interest rate of 17 percent a month.

Rep. Jay Lawrence, R-Scottsdale, acknowledged the high rate but said some people cannot get quick cash any other way.

"No one has talked about the individual, the one little guy, sitting, buried in illness, a son or daughter who needs hospitalization, a wife who needs an operation," he said.

But Rep. Brenda Barton, R-Payson, one of four Republicans who broke party ranks, said that's not true.

"This has been pushed hard, folks, and I know that. But this particular type of legislation is not necessary in Arizona. There are alternatives and the interest rate is much lower," Barton said.

She said credit unions offer alternatives to payday loans and faith-based organizations can often help with emergency situations.

Rep. Reginald Bolding, D-Laveen, chastised his colleagues for approving the industry-sponsored measure.

"We are building wealth on the backs of people in poverty. We should be ashamed of ourselves, each and every single one of us," he said.

The measure now needs approval by the Senate.