Payday loans aren't needed

Nonprofit organizations normally do not speak out against propositions, or legislative issues, even when we don't agree with The Sun editorials. Agencies such as 501c(3) nonprofits do not typically lobby but we can and should advocate on behalf of our customers.
 
Both the Yuma Community Food Bank board of directors and the Habitat for Humanity of Yuma board of directors have signed on as public endorsers of "NO on Proposition 200." Let me give you the other side of the story that affects the day to day lives of the middle class and low income families that non-profits support in our community.
 
The Sun's editorial endorsement of Prop 200 fails to specifically inform readers that the measure would legalize up to nearly 400 percent interest on payday loans in Arizona forever. That means for every dollar loaned out, the payday loan industry can receive $4 interest.
 
In the editorial, those rates were vaguely called "high," which gives the reader no clue that in fact the payday loan industry is asking for a special deal so they can charge a rate more than 10 times higher than the 36 percent interest cap that applies to other consumer lenders in Arizona.
 
They received a special deal that allowed them to ignore the 36 percent cap in 2000. That special deal expires in July of 2010, unless they're successful in passing Prop 200. If they succeed, they'll have written their own rules permanently into the books.
 
Essentially, passing Prop 200 would institute up to 400 percent interest payday loans indefinitely, while rejecting it would bring payday lenders under 36 percent.
 
It seems like an easy choice.
 
The editorial fails to tell readers that payday loans are not really "payday" loans at all - most borrowers can't pay them back on payday when they're due in full. Most borrowers have to renew their loans at least five times - the average borrower at least eight times - meaning they end up paying back much more in interest than they ever borrowed in the first place!
 
Payday loans are set up this way on purpose. This is their business model. If borrowers could pay them back immediately, the payday lenders wouldn't make money.
 
The Sun fails to tell readers that Prop 200 is not really a reform at all, but a desperate attempt by the out-of-state payday lenders to keep their predatory practices legal in the state.
 
At the Food Bank, we see first-hand what happens to the people who go to the payday lenders for help and end up in worse shape than when they started. It's got to stop now! With rapid increases in the cost of fuel, food and basic necessities, our clients don't need this type of "service."
 
Prop 200 is wrong for Yuma and wrong for Arizona. Readers should vote "no" on Prop 200, and get involved by visiting www.200isNoReform.com.


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RONNA SUE STUBBS
President/CEO of Yuma
Community Food Bank and Interim Executive Director of Habitat for Humanity