Payday loan shops in Arizona were dealt a blow Tuesday after a state Senate Committee voted down a measure exempting the firms from an existing sunset law forcing the firms to abide by a strict 36% rate limit.
The Arizona Credit Union League, joined by consumer groups and state Attorney Terry Goddard, hailed the 5-3 defeat in a Senate Appropriations Committee as a win for consumers.
Many of the estimated 600 payday outlets in the state are expected to convert to pawn shops, check cashers and offer other services as they eliminate the lending feature.
Two years ago Arizona voters rejected a payday-backed referendum to overturn the sunset law, which now goes into effect June 30.
The payday firms more than a decade ago won an exemption from the usury laws. Without that exemption, the fees the firms now charge, which compute to more than 350% on an annual basis, will become illegal.