Legal Status: Legal

Citation:
Ariz. Rev. Stat. § 6-1251 et seq.

Loan Terms:
Maximum Loan Amount: $500
Loan Term: Min: 5 days
Maximum Finance Rate and Fees: 15% of check
Finance Charge for 14-day $100 loan: $17.65
APR for 14-day $100 loan: 459%

Debt Limits:
Maximum Number of Outstanding Loans at One Time: One
Rollovers Permitted: Three (extensions)
Cooling-off Period:
Repayment Plan:

Collection Limits:
Collection Fees: $25 NSF fee + actual charges assessed by the financial institution
Criminal Action: Prohibited

Where to Complain, Get Information:
Regulator: Arizona Department of Financial Institutions
Address: Financial Enterprises Division, 2910 N. 44th Street, Suite 310 Phoenix AZ 85018
Phone: (800) 544-0708
Fax: (602) 381-1225

Applicability: This statute applies to transactions made pursuant to a written agreement in which a licensee accepts a check and agrees to hold it for a period of time before presentment for payment or deposit. Otherwise, the consumer loan act applies. Ariz. Rev. Stat. § 6-601 et seq. (36% on loans up to $1,000; on loans greater than $1,000: 36% on the initial $500 and 24% on the excess).

Exemptions: Banks, savings and loan associations, or financing/lending institutions authorized or licensed to transact business under the laws of the United States or Arizona. Any person that is principally engaged in the retail sale of goods or services and that from time to time cashes checks, drafts, or money orders for a fee or other consideration which does not exceed $2.00.

Licensing requirements: Applicants must provide required information, including a financial statement and a credit report. An applicant must be a U.S. citizen, not have been convicted of a crime that involves moral turpitude, and not have defaulted on payment of money collected. Must have a minimum net worth in cash or cash equivalent of at least $50,000. Licenses are renewed annually. Certain reasons for revocation or suspension of licenses are listed, including violating this law.

Required disclosures: Must conspicuously post a notice that states the fees charged at every location that is licensed. Must have a written agreement for each loan that contains the name of the licensee, the transaction date, the amount of the check, the amount to be paid by the consumer, a statement of the total amount of the fees charged, expressed as both a dollar amount and as an annual percentage rate and which also complies with state and federal truth in lending laws. The written agreement must also state prominently: “No customer may have outstanding more than one deferred presentment service agreement at one time and the face amount, exclusive of fees, cannot be more than $500.”

Prohibited acts: Failing to pay annual renewal fees or file the annual financial statement; insolvency; violating the act; conviction of any crime which is a felony or other crime that is a breach of trust or dishonesty; making a material misstatement or omission on the application for a license; operating without a license for each location from which the business is conducted; making a loan without first obtaining reasonable evidence that the account on which the check is drawn is open and active; making loans or extensions of credit other than those allowed under this law; advertising in any way which contains false, misleading, or deceptive statements; engaging in unfair or fraudulent practices; altering or deleting the date on the check accepted by the licensee; accepting an undated check; failing to take measures to ensure that no customer has more than one deferred presentment loan outstanding at any time with any licensed lender in the state; requiring security for the loan other than the check or requiring a guarantee; providing gaming or lottery tickets, alcoholic beverages, or requiring the purchase of other goods and services in order to get a loan at any licensed location. A licensee may not use the criminal process to collect on a deferred presentment loan.

Permitted charges: Not more than 15% of face amount of the check. This fee can be charged only once for each transaction. The fee is earned at the outset and need not be refunded if the consumer repays early. The fee is not interest for any purposes.

Loan terms: Loan can be no greater than $500, excluding the permitted fees. Loan agreement must be in writing. The loan cannot be extended more than 3 consecutive times. For each extension, the licensee shall terminate the previous agreement and sign a separate agreement. The licensee may charged the permitted fee for each extension.

Enforcement: Criminal penalties for making loans without a license is a misdemeanor. License can be revoked for violation of the law.