It is true that the legal status of payday lending varies from one state to another state. Thus, payday lending is still a debatable subject and it is in the hands of the individual state to make decisions about permitting payday lenders. In Arizona, traditional payday lending was dead almost a decade ago.

Legal status of payday loans in Arizona-

The legal status of payday lending in Arizona is prohibited. In July 2020, the law that was allowing payday lenders to operate in Arizona had expired. So, in the current scenario lenders who want to operate in this state should stick to 36 % APR small loan cap.

Although payday lenders have tried multiple times to repeal the law by stating payday loans in different names but in vain. Before 2010 payday loan lending was legal in Arizona. Loans can be taken for 5 days with a maximum limit fixed for it and APR that was much more than the current one.

Arizona is one amongst the 16 states where payday lending is prohibited. While there are states like Texas where the lender is free to charge as much as they want, Arizona has totally a different approach towards payday lenders. States like Hampshire, Colorado, Montana, South Dakota and Arizona are regulated by laws that limit the usurious lending rates.

The Payday Loan Reform Act was defeated in 2008. This act was an initiative taken to let payday lending continue in the state of Arizona. But it was defeated and prohibition on payday lending persisted.

In 2010, when the law that protected payday lending expired payday lenders were allowed to either comply with law or leave. This resulted in many payday lenders to discontinue their services in Arizona. In that situation the two national banks of Arizona that is Wells Fargo and US Bank came forward and agreed to provide cash advances to customers with direct deposits.

In 2017 also an attempt was made to revive payday loans in the name of Consumers Access Lines of Credit or Flex loans. But like earlier attempts this also failed as the legislation did not passed. So, till date payday lending is prohibited in Arizona.

You can visit the link for detailed information about legal status of payday lending in Arizona.

Rates, charges and fees in Arizona-

All licensed lenders need to comply with laws that outline the loan amount and finance charges. Department of Insurance and Financial Institutions (DIFI) is the regulatory body that enforces payday loan laws in Arizona. DIFI is responsible for giving out licenses to financial institutions in Arizona.

36% of loan rate is to be applied when the original principal amount is less than or equal to three thousand dollars. On the other hand when the principal amount exceeds three thousand dollars 36% of loan rate will be applied on the first three thousand dollars and separate 24% of loan rate will be imposed on that amount of the principal that is above three thousand dollars.

Late fees that could be up to 5% depending on the amount of installment that remained unpaid within seven days of its due date will be levied. Loan origination fees are usually less than 5% of the principal amount or could be straightaway $ 150. All these are not related to rate of interest and should not be included on loan balance subject to interest.


The DIFI looks after the activities of the financial institutions and maintains the regulations of the state. They are also responsible for investigating all the complaints filed by customers. In a way this body acts like a resource that keeps record of Arizona residents who are victim of illegal payday lending.

Payday lending in Arizona-

Although it seems like payday lending is not possible in Arizona, there are ways payday lenders have managed to make existence possible. Online lending has been introduced even though there is huge confusion regarding whether state laws imply to such type of lending. Besides, there are tribal lenders who operate under tribal sovereignty and are not related to federal or state government.


The simplicity of borrowing and ease of access make payday loans a convenient choice at the hour of crisis. But the borrower should be careful about the final decision. It is because this is going to have an impact on his or her financial future.

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