Newspaper Editorial Urges More Oregon Cities to Act Against Payday Cash Loans
By Desmond CarlislePayday Loan Writer
Eugene, Springfield and other cities in Oregon should follow the lead of the city of Portland in regulating payday loans, urges an editorial in the Eugene Register-Guard.
The newspaper calls on state and county governments to control the industry, saying that it is not a municipal responsibility. But House Republican leaders killed a bill last year that would have reduced the interest rates that lenders charge and made other important changes.
Last Wednesday, the Portland City Council approved an ordinance that partially fills the void left by the state government. There are no strict regulations on Oregon payday loan companies statewide, one of the few states that can make such a dubious claim. City officials in the localities of Gresham and Troutdale are expected to vote on similar meaures next month.
The paper urges Eugene, Springfield and other communities to protect the many Oregonians who are charged excessive APRs (annual percentage rates) for their cash loans.
State law prevents Portland officials from limiting the exorbitant interest rates, which have reached 500 percent annually. But the city's new law requires payday advance agencies to give borrowers a payment plan, with no penalty, when they have difficulty repaying payday advances. It also gives borrowers the right to cancel payday loans within 24 hours, and bars lenders from rolling over loans before collecting at least a fourth of the principal.
Payday industry officials argue that the loans provide a valuable service to customers who prefer their convenience and speed, but critics reject that claim, believing the opposite is true. They're often unable to repay their short-term loans on time and have to roll them over again and again, leading to an endless cycle of debt.
Because payday lenders often charge $20 for every $100 two-week loan and are allowed to make three rollovers under state law, a loan of $300 could leave the borrower with $240 in interest alone. Organizations should keep working to put a measure on the November ballot that would do what cities cannot legally do — impose reasonable limits on payday loan rates.
The editorial calls for a reduction of at least 50 percent in payday loan annual interest rates, limiting rates on extensions to 36 percent and requiring payday loan terms of at least 31 days - more than twice the current norm. Until Oregon voters can approve such a measure statewide, or the Legislature does its job, more cities need to follow Portland's lead.
March 2nd, 2006 at 10:43 am
[…] The City Council of Gresham, Oregon will not regulate payday loan interest rates but is considering placing restrictions on terms and conditions, according to the Oregonian. With an estimated 14 payday lenders scattered across strip malls and on most of the city’s major streets, Gresham is one of several municipalities contemplating ways to limit (or at least control) Oregon payday loan proliferation. […]