Arizona Payday Loan Laws and Legislation

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Payday loans represent cash advances given to a borrower under high percent for a short term. The usual procedure of obtaining such a loan is not really complicated. The borrower should contact the main office of a lending company and write a post-dated check. In return he is provided with the required cash. Before the consumer's direct deposit check comes through, the lender keeps the given check. Payday loans are pretty expensive in terms of interest rates and therefore a lot of states have prohibited them.

In the State of Arizona, however, payday lending is legal and is regulated by the corresponding laws and charters.

According to Arizona state law the maximum amount of payday loan is $500. The loan cannot be given for a period of less than 5 days and lenders are not allowed to charge more than $17.65 for every $100 borrowed. Other terms for payday loans are maximum rate of finance and fees should not exceed 15% of the check. The maximum APR is 459% on every $100 dollar loan given for 14 days. One payday loan is allowed at a time for every borrower but three rollovers are allowed. However, it should be taken into consideration that every renewal of a repayment period is likely to be fraught with more finance charges and fees.

Arizona state law, however, imposes one severe restriction on payday loan business. It is a "fee-free" repayment plan. It presupposes that borrowers are able to rollover their loans for a period of 90 days and during this period are not obliged to take additional amounts of money. A person will not be charged with any new fees except for finance charges. However, in some cases the latter are enough to escalate interest rates to the sky.

The following limits of collection are applied in the State of Arizona: NSF fee should not be more than $25 as per the assessment of financial institution. Criminal actions against the borrower are not allowed. Arizona Department of Financial Institutions regulates all the aspects of payday lending procedures.

According to Arizona state law payday lenders should comply with the certain regulations. The latter presuppose that for every transaction there should be a loan agreement with all the information about the loan amount, terms of repayment, fees and financial charges, information about APR and date of the transaction; also the name of the business. All the funds should be listed in American dollars.

It is also required that all the information about payday lending should be available to every customer in English and in Spanish, provided that they are both state languages. Moreover, every payday lending company must have a license in order to operate in the state of Arizona - this is required by the law.

To cap it all, one should say that there are situations when payday loan can be very helpful. Sometimes urgent expenses appear from nowhere and have to be handled quickly in order to avoid further problems. In cases like this payday loans are a real way out. With such service you can be sure that you are not exactly tied to your paycheck and can get the required cash quickly and without much stress.

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