Finance | Consumer Information | Arizona DIFI

Understanding Consumer Credit

We use credit every day—whether using a charge card to make purchases, buying a car or furniture on an installment plan, obtaining a mortgage, or borrowing money to meet unexpected medical expenses. It pays to compare costs and services before committing to a credit obligation.

Questions To Ask Before Applying

Before applying for credit, ask for all information the lender has about the credit you are considering. It is important to understand the following before you commit:

Interest & Charges

Generally, in Arizona, there is no maximum interest rate on loans except for certain loans made by a small loan company or title lender. The maximum legal rate is 10% per year if the interest rate is not stated in writing. There are various methods a lender may use to calculate interest; however, a lender is not permitted to compound the interest (charge you interest on interest) on installment loans.

The Truth in Lending Act requires lenders to prominently display the "finance charge" (the total amount you will pay to obtain credit, including interest and other charges) and the Annual Percentage Rate (APR) on all forms. Lenders may also charge and must disclose additional fees such as appraisals, credit reports, lien filings, and title insurance. If you miss a scheduled payment, lenders may charge late fees or collection expenses.

Insurance Coverage

Auto lenders require "full coverage" auto insurance (liability plus comprehensive and collision). If you fail to obtain insurance or let it lapse, your contract allows the lender to obtain insurance to cover your vehicle. Home mortgage lenders require homeowners insurance to cover their investment against catastrophic damage. Note: Credit life and disability insurance are optional products and are not required for loan approval.

Consumer Protections & Penalties

Lenders cannot charge more than the stated maximum rate of interest. A credit contract may become a zero-interest contract if the interest rate you are charged is higher than the legally prescribed rate. You have the right to sue for punitive damages and recover court costs if you suffer a loss due to an interest overcharge or other violations of law.

Where to Obtain Credit

All lenders are selective in granting credit, but the Federal Equal Credit Opportunity Act protects you from discrimination based on race, color, national origin, sex, marital status, religion, or age.

If you are turned down: A lender must notify you in writing about a credit denial and the reason why within a reasonable time. You can request a written statement of the denial reasons within 60 days, and the lender has 30 days to provide it.

If You Are Past Due

If you "default" on a loan, lenders must give you written notice and time to catch up on payments (though no pre-notice is required before repossession on collateral loans). If unresolved, lenders can repossess and sell the collateral, and you may be sued for any remaining deficiency balance.

Dealing with Debt Collectors: The Fair Debt Collection Practices Act governs third-party collectors. If you challenge the validity of a debt in writing within 30 days of the first notice, the collector must cease efforts until verification is received.

Collectors CANNOT:

Make threats of violence, use obscene language, or hold debtors up to public ridicule.
Make harassing telephone calls or call at known inconvenient times.
Impersonate government officials or attorneys.
Discuss your debt with third parties without your permission.

If subjected to unethical tactics, contact the manager of the collection agency, the original creditor, an attorney, or file a complaint with DIFI.

Mortgage & Foreclosure Help

Are you facing foreclosure or struggling with mortgage payments you may not be able to afford? The Arizona Department of Insurance and Financial Institutions offers the following guidance to help you navigate this difficult situation and avoid predatory "rescue" scams.

DO Take These Steps:

DO call your lender or servicer the moment you think there might be a future problem with paying your mortgage on time. The lender or servicer is the first person you should talk to. They deal with these situations every day and may not charge a fee to modify your loan if you are eligible. Read HUD's advice on contacting your lender (opens in a new tab).
DO call the Arizona Mortgage Foreclosure Help Line at 1-877-448-1211. This is a FREE, bilingual connection to an Arizona counselor trained to assist you in working with your lender. You can also find help via the HUD Approved Housing Counseling Agencies directory (opens in a new tab).
DO contact your lender immediately to implement a "work out" program or plan if you fall behind on payments. If you cannot bring your payments current, think about selling your home and keeping the equity you have built up.
DO get promises in writing. Oral promises are not legally binding.
DO walk away from anyone that wants you to pay an upfront fee for their help.

DO NOT Make These Mistakes:

DO NOT pay an upfront fee for loan modification services.
DO NOT sign over your deed without consulting a trusted expert. Be extremely wary of anyone who says they can "save your home" if you simply deed it over to them. This can quickly lead to the complete loss of your home.
DO NOT file for bankruptcy just to keep your home without first contacting a lawyer. While it may stop foreclosure temporarily, the bankruptcy court may eventually allow your lender to foreclose.
DO NOT ignore lender "warning letters."
DO NOT sign documents with blank spaces or any documents that you do not fully understand.

Beware of scam artists who file for bankruptcy in your name without you knowing, giving you the false impression that they are successfully negotiating a new payment with your lender on your behalf.

Safe Online Shopping

Online shopping is a daily occurrence for many Arizonans, but doing it safely is still a major challenge. Follow these tips to protect your financial information and ensure a secure transaction.

Know Who You Are Doing Business With

Shop with brands, stores, and people you know and trust.
Read their privacy policies to understand how your payment and personal information will be stored and used.
For Marketplace vendors (Amazon, Etsy, Walmart, etc.):
- Read reviews on both the seller and the specific products.
- Familiarize yourself with any purchase protection services or guarantees offered by the marketplace platform.
- Be completely familiar with the product specifications before purchasing.

Be Cautious of "Too Good To Be True" Deals

Scammers often rely on unsolicited emails, third-party ads, pop-ups, and text messages offering unbelievable discounts. Do not click on suspicious links.
Verify the web address (URL). Ensure the website you are on is secure—look for "https" and a lock icon (🔒) in your browser's address bar.
Shop from a secure location. Avoid making purchases over public Wi-Fi unless you are using a secure Virtual Private Network (VPN).

Use Safe Methods for Purchase

Use credit cards instead of debit cards when possible. Credit cards offer superior protections under federal law to limit your personal liability for fraudulent charges.
Consider using a credit card even when paying through peer-to-peer payment apps and digital wallets (such as PayPal, Venmo, Google Pay, or Apple Pay).
When using shopping apps, review your safety and privacy settings. Enable multifactor authentication (MFA) not only for signing in, but also for approving purchases where available.
Keep copies of your purchase confirmations and receipts. Compare them regularly against your bank or credit card statements to spot any unidentified charges immediately.

You Have Been Scammed - Now What?

Scammers operate in many different ways, and even the most cautious shoppers are still vulnerable. If you have been scammed, it is important to take action immediately.

Exercise Purchase Protection: If you bought the item through a major platform (like Amazon, eBay, or PayPal), file a claim through their purchase protection or dispute resolution center immediately.
Contact Your Bank or Credit Card Company: Report the fraudulent charge as soon as possible. Have your confirmation notices, emails, and details about the transaction available, including the exact website address where the purchase was made.
Report it to the Government:
- Report the scam to the Federal Trade Commission (FTC) at ReportFraud.ftc.gov (opens in a new tab).
- If it involves a foreclosure rescue scam or fraudulent mortgage modification company, file a complaint with DIFI.
- For general consumer fraud in Arizona, file a complaint with the Arizona Attorney General's Office (opens in a new tab).

Financial Education & Resources

Explore the following federal, state, and non-profit resources for financial education, consumer protection, and online safety.

Consumer Financial Information