A payday loan might be quick and easy to get, but it can end up costing you. This election day a proposition is on the ballot to reform the industry.
Supporters of proposition 200 say payday loans provide a lending option for those who need it. They say if paid back on time -- they're affordable. They argue that some proposed changes would reform the industry to make it easier on borrowers.
Opponents to the measure say 90 percent of payday loan borrowers run into problems repaying them because they carry a 400 percent interest rate.
They say the proposition is deceptve because it tricks people into thinking they're voting to reform the industry and keep it going, when it's already slated to be banned in Arizona in 2010.
Supporters say it's an easy to use program that benefits many.
"It's simple, convenient and get this-- cheaper than many other credit options available to a typical customer,"says Prop 200 supporter Stan Barnes.
"It will remain as an option for customers who decide it's the right thing for them," Barnes says.
In 2010 the payday loan industry is already set to be shut down. A yes vote for Prop 200 will allow it to keep going.
"Eliminating credit options for people in a down economy is not a good thing," says Barnes.
The reforms, which include lower fees and flexible repayment plans, will force some stores to close their doors.
"Viable companies, ones that play by the rules will survive and help those customers who use that product to get through to the next payday," says Barnes.
Some agree that Prop 200 is needed, others say it's just a smoke screen.
Diane Robles was struggling to pay her bills several years ago.
"I was having trouble making ends meet," says Diane Robles. "What I thought was going to be a quick fix turned out to be a financial nightmare."
Robles took out $2,500 dollars in payday loans. She estimates over two years that she paid close to $20,000 in fees trying to pay them off.
"I was thirty days from losing my house, I was in foreclosure," says Robles.
Opponents to prop 200 say her story is all too familiar. They say the reform does nothing to lower the nearly 400 percent interest rate.
A no vote will force the industry out of business in 2010.
"This is a business built on trapping people. The average customer ends up paying back almost 800 dollars on a 300 dollar loan after having to renew it or roll it over," says prop 200 opponent David Higuera.
Source: http://www.kvoa.com/Global/story.asp
