AZ lawmaker looks to fill void left by short term lending ban

After lawmakers in Arizona effectively banned short term lenders in August, one state representative has proposed a new kind of loan that would allow higher interest rates, the Arizona Business Gazette reports. The new rules Representative Jim Weiers, the representative from Phoenix, proposes for short-term loans include a sliding scale for interest rates on loans of $200 to $3,000. The bill would also permit lenders to charge acquisition fees of $75 or up to 10 percent of the loan, whichever is lower. The short term loans were useful for people whose poor credit scores blocked them from getting credit cards. Arizona law mandates that lending firms cannot charge annual interest rates higher than 36 percent. Legislators created an exception in 2000 for deferred presentment transactions, but that law was allowed to run out in 2010. As the law made it difficult for lenders to do business, many left the state. Weiers told the paper that the loss left a gap for consumers. Lenders in other states are also coming under fire. While a panel of state representatives rejected a pair of bills to limit lenders in South Dakota, the Wall Street reform bill being reviewed by the Senate would give regulators oversight on short term lenders.