• The quick cash available at payday lenders can be tempting.pass it on image by Pix by Marti from Fotolia.com
  
  Payday loans are short-term, high-cost accounts. Consumers visit a branch office, write a post-dated check in the amount of the loan and receive cash in return. The lender then agrees to hold the check until the consumer's direct deposit check comes through. This business has come under fire in most states in the U.S. due to the extreme rates of interest and high fees. The situation is no different in Arizona.
  
  

General Requirements

• The maximum loan amount for a payday loan in Arizona is $500. These loans must be for a term of at least five days. The minimum finance charge on a $100 loan is $17.65. The maximum APR (Annual Percentage Rate) on a $100 dollar loan is 459 percent. Customers in Arizona can only have one payday loan outstanding at one time. In addition, customers can renew an existing payday loan three consecutive times. This means that a customer can send his lender another post-dated check without paying off the first loan. This will result in more finance charges, fees and, possibly, NSF (insufficient funds) charges.
  
  

Exemption

• Payday lenders received an exemption from current Arizona law in 2009. According to the Department of Finance, the maximum APR on any credit extended in Arizona is 36 percent. With this exemption, these lenders are allowed to charge upwards of 459 percent on all payday loans. This exemption, however, is set to expire in June 2010. Payday loan companies are fighting this expiration date in the Arizona legislature, claiming the cap on interest rates will have detrimental effects on their branch offices.
  
  

Fee-Free Repayment

• One of the only tight restrictions on payday lending in Arizona is the "fee-free" repayment plan. This offers current payday loan customers the option to rollover their loans without taking new funds for a period of 90 days. This 90-day period will be free of any new fees. This does not, however, include the dramatic finance charges--those which drive interest rates into the hundreds of percents. Legislation, as of April 2010, is pending in the Arizona Senate and House to mandate stronger controls of the payday lending business.