Payday lenders get OK from House panel for new loan product

PHOENIX (AP) - A House committee dominated by Republicans has approved legislation allowing a new type of consumer loans requested by top payday lending companies.

Wednesday 5-3 party-line vote by the House Commerce committee on House Bill 2611 came despite testimony from consumer advocates that the loans lock borrowers into a cycle of debt. Opponents also said a 2008 voter initiative rejected payday loans in Arizona.

Republican Rep. J.D. Mesnard says his proposal allowing so-called "flex loans" is designed to let borrowers with bad credit to get small loans to meet essential needs. They are a different product from payday loans but still carrying total fee and interest rates that can top 200 percent a year.

Democratic Rep. Debbie McCune Davis says the proposal goes against the will of voters.

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