Imposing interest rate caps on payday lenders across the state of Arizona would not be beneficial to the industry or the people who depend on it for financial help, according to a letter published Tuesday in the Arizona Business Journal by the Center for Consumer Freedom’’s Director of Communications Sarah Longwell.
Longwell’’s letter was written in response to an opinion piece that had been published in the Journal in December that characterized payday lenders as "scoundrels" that were "sucking the blood out of Arizonians" through their high interest rates.
However, Longwell responded that rates were in place to provide a service that many Americans utilized to stay above water financially. Referring to a Federal Reserve study she added that 88 percent of payday loan borrowers had been satisfied with their experience.
"Short-term ”payday” lenders have been under attack by state and federal lawmakers who denounce their services as ”predatory,”" She wrote. "But across the country, borrowers in need of emergency cash choose these loans willingly, over other financial options."
She also referenced a recent study that found payday lenders currently only made $1.37 in profit for every $100 loaned, and that if rates were to capped that many would be forced out of business and no longer be able to serve the customers who depend on them.
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