PHOENIX  State lawmakers derailed  at least temporarily  a proposal that would replace payday lending with another type of highinterest loan.

The 44 vote Monday night by the House Banking and Insurance Committee came after Rep. Doug Quelland, RPhoenix, refused to side with fellow Republicans. Quelland said he does not see any advantage to amending state law to allow outofstate firms to charge high interest to Arizona residents.

But lobbyists for the two companies that want to offer the loans already are looking for another way to make the proposal law, as is Rep. Andy Biggs, RGilbert, who agreed to carry the measure for them.

Current law limits interest on consumer loans to no more than 36 percent a year.

Payday loans of up to $500 have been an exception since 2000. Those twoweek loans have an effective annual interest rate exceeding 400 percent.

Last November, however, voters decided by a wide margin not to allow that practice in Arizona after June 30, 2010.

This new type of loan could be from $200 to $3,000. Funds could be borrowed for no less than five months and, depending on the circumstances, for up to 24 months.

The big debate over HB 2608 came over the cost: Loans carry a 10 percent origination fee, with a minimum of $15 and maximum of $75. On top of that, lenders could charge up to 4 percent per month.

Biggs said that can translate into an annual percentage rate of just short of 100 percent on a $750 loan.

“High? Yes,’’ he said. But Biggs said that is justified because these loans, which are unsecured, have a high rate of default.

“You have to be able to cover your carrying charges.’’

Rep. David Bradley, DTucson, said he understands that. But Bradley said there has to be some sort of limit to what is considered acceptable.

Biggs, however, would not set a number.

“There are many people who think that individuals living in our country today are incapable of making decisions for themselves,’’ he said.

“There are many people who think government ought to make many of these decision that affect their lives, for good or ill,’’ Biggs continued. “It is my position that I don’t know more than anybody else in this room on how each one of them should live their lives.’’

But Kathy Jorgensen who lobbies for the Society of St. Vincent de Paul, said there is a role for government in protecting people from bad decisions  and from getting trapped in a cycle of debt.

“I understand that nobody forced them to do it,’’ she told lawmakers. “But desperate, financially unsophisticated people make bad decisions.’’

Jorgensen also said she sees these loans as little better than the payday loans voters just said they want outlawed.

“If it looks like a duck and walks like a duck, it’s a duck,’’ she said.

“This duck is different,’’ responded House Majority Whip Andy Tobin, RPaulden. Tobin also said there is a need for these small consumer loans  even at the high interest rates  as banks and others are not lending those amounts.