Gresham, Oregon, May Follow Portland’s Lead in Effort to Limit Spread of Payday Cash Loans
By Desmond CarlislePayday Loan Writer
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.
The city’s payday advance lenders say they provide an essential service, a good source of cash for people who need a brief loan fast. But annual interest rates that range from 391 percent to 520 percent have consumer advocates urging action. The Gresham City Council must decide whether to regulate payday loans by mirroring a Portland payday loan law passed last month in the state’s biggest city.
Cities aren’t allowed to cap the payday companies’ interest rates, said Gresham City Councilor David Widmark, who proposed joining Portland’s effort. But the city can try to keep people from digging a hole of debt that they can’t climb out of, and that means limiting their reach.
Payday loans are accessible by people with bad credit or no credit history, as long as they are employed, according to the Oregon Division of Finance and Corporate Securities, which enforces existing state payday loan laws.
Lawmakers worry, though, that the loans are difficult to repay if an extension is filed, and that the cost is too steep even initially. The average loan is about $300 and lasts for two weeks, with payday cash advance agencies charging a $15-20 fee for every $100 lent. People who can’t pay the loan back on schedule can extend the deadline up to three times — ultimately paying $180 to borrow $300.
Gresham’s proposed payday cash loan law is almost identical to the one Portland. It would give potential borrowers a day to change their minds and cancel the loan. It would also prevent payday advance companies from extending the loan unless the borrower had already repaid a quarter of the principal. Both measures, lawmakers say, would limit the accrual of debt that consumers have a hard time paying.
The Times will update this story with more information as it develops.
March 5th, 2006 at 11:12 am
[…] Consumer advocates say lax banking laws in Missouri make the state a haven for the payday cash advance business. Missouri consumers can’t borrow more than $500 per loan and aren’t allowed to pay more than 75 percent of the original loan in interest and fees. Yet the highest APR reported in Missouri was an astounding 1,277.5 percent. […]
March 9th, 2006 at 11:27 am
[…] The ongoing Oregon payday loan fight is getting personal, even religious. A Eugene, Ore., pastor spoke with the Daily News and recalled a parishioner who was living on Social Security and became mired in debt after taking out a couple of payday loans. […]