The payday loan industry has spent about $12 million dollars on its campaign to pass Proposition 200, according to state records. Opponents say the massive spending by the lending businesses is proof that the November ballot initiative doesn't offer real reform for families who need short-term loans.

Prop 200, also called the Payday Loan Reform Act, would make some positive changes for consumers. It would drop the maximum loan fee to $15 per $100 borrowed, but consumer lending advocates say the fee is still the equivalent of a 400 percent annual percentage rate. Prop 200 would also cap the maximum loan length at 35 days and allow customers to request an installment repayment plan, but only once a year.

A major provision would be eliminating the sunset provision on Arizona's current payday lending law. This would benefit payday loan companies by allowing them to operate in the state indefinitely. If Prop 200 fails, the businesses would have to either close in 2010 or drop their maximum interest rates to 36 percent like other lending institutions. A no vote would also give the legislature a chance to create more vigorous reforms for the industry while pushing back the sunset date. Click Here!

At a "No on 200" rally Thursday, Senator Debbie MaCune Davis said the best way to bring reform is to just let the current law expire. "The exploitation of citizens and the predatory practices they have in their current model would have to end," she said.

Stan Barnes, chairman for the Yes on 200 committee, defended the industry. He said payday loans are a simple way families can pay for unexpected expenses during hard economic times. "It's cheaper than bouncing a check, cheaper than overdrafting a credit card," he said.

Sources:http://www.azcentral.com/12news/news/articles