Payday lenders mull 2 options

Recent changes in the law regarding payday lenders have led many northeast Phoenix businesses that offer the service to diversify their products. But those that decided not to offer additional services are closing, leaving vacant storefronts in dozens of strip centers.

A 10-year-old state law that allowed payday-loan operators to set interest rates as high as 460 percent annually expired at the end of July. Businesses must set interest caps at 36 percent.

Opponents of payday lenders say consumers who frequented the businesses will do fine with their absence.

"There are a number of credible businesses that offer a fair price, products and services," said Charlene Crowell, communications manager for state policy and outreach for the Center for Responsible Lending in Durham,N.C. "Unfortunately, payday lenders have not been of that ilk. It is a flawed product that preys upon the poor and cash-strapped families."

John Rabenold, a spokesman for Check 'n Go, which had more than 100 locations in Arizona, including one in northeast Phoenix, said expiration of the law means consumers will have fewer choices.

Customers will continue to take high-interest loans, just riskier ones found on the Internet, he said.

"They will go to the Internet, start pawning their car, trumpet or wedding ring, or they will just bounce more checks and pay more money to the banks or they will pay their bills late," Rabenold said.

Check 'n Go plans to close all its stores by the end of the summer.

Many payday lenders in northeast Phoenix offer auto-title loans, check-cashing and other services, but Check 'n Go would rather close than diversify, Rabenold said.

"We're just not title lenders. We're not good at that. We don't know that whole industry and that customer base," he said.

by Eugene Scott The Arizona Republic August 7, 2010 12:00 AM




Payday lenders mull 2 options