Personal Loans in Arizona: What Licensed Lenders May Charge

How the Arizona rate cap works

A.R.S. 6-632 sets the finance charge on a closed-end consumer loan by bands of the principal. A loan of $3,000 or less may carry up to 36% a year. On a larger loan, the lender may charge 36% on the first $3,000 and 24% on the part above it, or one blended rate that produces the same total finance charge if you pay as agreed. Points, meaning finance charges paid up front, are banned except on certain loans secured by your home.

Section 6-635 lists the other charges allowed, such as lien filing fees, court costs and a dishonored check fee under Arizona's general check law, and bars any amount not listed. A second origination fee is not allowed on a refinance within a year of the first.

Who needs a license and who does not

A.R.S. 6-603 requires anyone doing business as a consumer lender, in Arizona or elsewhere, to hold a license from DIFI unless an exemption applies. A consumer loan means a closed-end loan of $10,000 or less, counting principal only, that carries a finance charge. The law also reaches anyone who tries to avoid it by any device, subterfuge or pretense.

• Loans above $10,000 fall outside the consumer lender law, so these bands do not apply to them.
• Banks and credit unions answer to their own charters and banking regulators instead, and a bank may charge the rates its home state allows. An online lender that partners with a bank may make loans through that bank, so ask who the lender of record is.
• Title loans and other short-term credit follow other rules. Our sister site Lendmira covers them on its Arizona lending laws page.

How Arizona compares with its neighbors

On the National Consumer Law Center's comparison of a $2,000 two-year loan from a licensed non-bank lender, California caps the loan at about 25% APR, Colorado at about 31% and New Mexico at 36%, while Nevada allows about 40% and Arizona about 41%. Utah has no cap except an unconscionability standard. The state rules map shows every state side by side.

What to check on an Arizona offer

• Find the origination fee on the Truth in Lending disclosure. If it is taken from the loan, less reaches your account; net loan proceeds shows how to check.
• Compare the APR, not the rate. On a small loan, the fee can push the APR several points above the contract rate.
• Read the late-charge clause. A licensed lender may charge 5% of an installment that is more than 7 days late; late fees and returned payments explains the rest.

Check a lender and file a complaint

1. 1 Look up the license in the state license search on az.gov, or in NMLS Consumer Access, before you apply.
2. 2 Keep the loan papers: the Truth in Lending disclosure, the agreement and any messages about fees.
3. 3 File a complaint with DIFI using its online form for financial institutions and enterprises, or by mail to the Financial Services Consumer Service Section, 100 N 15th Ave, Suite 261, Phoenix, AZ 85007.
4. 4 Send a complaint to the CFPB if the lender is a federally chartered bank or a bank partner; DIFI sends complaints about federal banks to other agencies.

Questions people ask