High-interest auto title loans targeted for ballot proposal
Signature gatherers are starting to fan out across Arizona in an effort to curb a type of high-interest lending in the state.
Roughly 20 community groups on Tuesday kicked off a drive to qualify a measure that would curtail loans that feature high interest rates and, critics say, trap borrowers in a debt cycle.
The yearlong effort supporting the Arizona Fair Lending Act seeks to gather more than 237,000 signatures to place the measure on the November 2020 ballot. It comes 11 years after Arizonans defeated Proposition 200, which would have extended payday lending indefinitely. An enabling law expired two years later, ending payday loans here.
“We thought we had taken care of (predatory lending) in 2008,” said state Sen. Lela Alston, a Phoenix Democrat who spoke at the kickoff rally across the street from a LoanMax title-loan store at 15th Avenue and McDowell Road, in her district.
“But those weasels found a loophole in auto title loans,” she said.
Auto title loans allow vehicle owners to borrow against the equity in their cars and trucks, using their vehicle titles. Critics say the loans charge annualized interest of up to 204%. The Arizona Fair Lending Act wouldn’t ban the loans but would cap interest at 36%, prohibit balloon payments and restrict other practices.
An Arizona title-lending group didn’t immediately reply to an inquiry seeking comment for this article.
Groups supporting the signaturegathering drive include the Military Officers Association, the Teamsters, Living United for Change in Arizona or LUCHA, the St. Vincent de Paul Society of Tucson, the Center for Responsible Lending, the Southwest Fair Housing Council and the NAACP.
The groups must collect at least 237,645 valid signatures by early July 2020 to qualify the measure for the ballot later that year. Both volunteers and paid signature-gatherers are being used in the effort.