Nearly a decade after Arizona voters outlawed “payday loans,” the lending industry is pushing a new type of high interest consumer loan. They’re getting support from Republican lawmakers.
Proponents are calling the House bill a “consumer access line of credit.” The measure would provide revolving loans of up to $2,500.
Michael Kerr is lobbying for the measure.
“This product is not payday," Kerr said. "It is an open-end line of credit. The closest analog really would be a cash advance on a credit card."
But the most significant provision would allow lenders to charge a daily transaction fee of point 4-5 percent per day. That computes to an annual percentage rate of more than 164 percent.
Despite that, Republicans said there’s a need for this type of loan.
"I believe there are people out there that are in emergency situations," said Republican Senator Debbie Lesko. "Maybe their car broke down. Maybe they don't have money for electricity."
Opponents said it would create a debt trap. The measure now goes to the full senate.