Arizona Payday Loans

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What’s a Cash Advance? A cash advance, also known as a payday loan is an unsecured short term personal loan. Unsecured means that the borrower does not need to provide collateral. Short term usually means the same period during which a regular salaried individual gets paid i.e. weekly, bi-weekly, or monthly. Personal meaning, the borrower promises to be accountable to make the payments himself without passing on the responsibility to any other business, partner, surety, etc.

Payday Loans vis-à-vis Small Loans

Arizona payday loans are different from small loans. Payday loans have a maximum loan amount of $500. While small loans usually refer to borrowings amount beyond $500. In case of small loans, different laws apply, specifically the Small Loans Act.

Payday Loan Expansion

Lenders that provide Arizona payday loans are growing. In 2005, there were around 650 cash advance locations. Now, it’s more than triple that number.  In fact, there are more online payday lenders in Arizona than there are McDonalds or Starbucks branches.

Conventional Payday Loan vs. Online Payday Loans

Taking out a conventional payday loan means that you have to go out and look for a lender.  A visit to the office of the lender is necessary.  On the other hand, online payday loans allow you to apply for a loan anywhere. All you need is internet connectivity and a smart device. This is available 24/7. Online forms require very little time to complete, around 2 to 5 minutes.

The best online Arizona payday loans provider do not require you to fax over documentation. All you need is to provide basic personal information and an authorization to conduct a credit check. To clarify, the credit check is not for the lender to determine your credit score, most payday lenders accept the fact that their client base have median to poor scores. The credit inquiry is to verify your identity and that you actually have a job or a regular source of income.

State of Arizona and Payday Loans

A resident of Arizona can apply for an online payday loan. The state regulates how a lender conducts itself with the borrower and the public. Below are the legal loan thresholds/terms:

  • Minimum loanable amount of $50 and maximum of $500
  • The loan terms must be clear, properly explained, and itemized
  • The loan terms must be posted in a conspicuous place
  • Closing costs and total costs must all be transparent.
  • Closing cost cannot exceed 19% of the loaned amount
  • The annual percentage rate APR must be clearly stated.

A Real Address

Payday lenders providing loans within Arizona must provide customers with contact information. This address must not be a P.O. BOX. This facilitates communication with the lender in case of customer inquiries or complaints.  As mentioned earlier, the business address of the lender determines the state law that applies. For example, if the online payday lender has its address in Alabama, then it is the Alabama laws on lending that should be followed. In other words, it is not the place where the borrower lives that determines the applicable law when it comes to online payday lenders.

Repayment Plan

If, for whatever reason, a borrower cannot pay Arizona payday loans when the debt becomes due, the best thing to do is to contact the lender a couple of days in advance. The law allows the borrower the right to ask for a repayment plan, a maximum of 2x per loan. The first is for repayment. The second is for an extension. There may or may not be added costs involved.  This is a better alternative than defaulting because if you are lucky, you get an extension for free. At the very least the interest you pay will be lower.

Rollover

A rollover is different from a repayment plan or an extension.  In a rollover, you take out a new loan to pay off the old loan.  Tip: some lenders are allowed to provide rollover loans, some do not. This depends on the law of the state in which the payday lender has its actual business address.

Weigh your Options

The reality is that Arizona payday loans may have higher interest rates than long term loans. But you only pay interest once so the total interest paid is usually a lot lower. In some cases paying the interest is a better alternative. Below are a few examples:

  • Your car breaks down on the road and the mechanic only accepts cash, no credit cards. In which case you apply for a payday loan, have the money wired to the mechanics account or collect it with the local payment processor.
  • Your electricity is about to be cut. It’s is embarrassing to have to explain to your family members and neighbors. Not to mention the fact that a reconnection fee is needed.
  •  You found the perfect apartment to rent. But there is another person waiting in line and you do not have the cash to pay the reservation fee.
  • You need a small amount of money to tide you over for a couple of days.

Arizona Unemployment Statistics

The unemployment rate in Arizona is 8% (June 2013). Several years ago the unemployment rate was 5% (2006). The ideal scenario is for consumers to apply for Arizona payday loans before the loss of their job gets reported to credit bureaus. If you find an alternative source of income in a couple of months, do not default, use the repayment plan.

Know Your Options

Arizona law requires payday lenders to inform you of your options. This usually means referring you to a credit counselor or advising you to get financial education. Tip: credit counselors charge cheap, some even do it for free. There is a database of licensed credit counselors per state, best refer to them.

Last but not the least, pay your Arizona payday loans when it falls due or when the repayment plan falls due. You signed a contract, honor it. Also, by paying on time and in full, you are doing your part to limit the risk that payday lenders take. In the long term, the lower the overall risk of lending, the lower the interest rates that will be charged.

Arizona Department of Financial Institutions
2910 N. 44th St. Suite 310
Phoenix, AZ 85018
Phone: (602) 771-2800
Fax: (602) 381-1225
Web: http://azdfi.gov
Email: consumeraffairs@azdfi.gov

 

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