Bend Bulletin to the City: Leave Payday Loan Regulation to State Legislature
By J.J. CameronPayday Loan Writer
The city of Beaverton is close to cracking down significantly on payday loans. An editorial in The Bend Bulletin, however, states that such cash advance regulations are better left to the state of Oregon, as opposed to each city. Let's paraphrase the article …
Bend, like many communities across Oregon, is home to a variety of payday loan lenders, companies that lend the cash-strapped enough money to tide themselves over until the next paycheck.
Problem is, the industry has a well-earned reputation for predatory tactics, so much so that the Oregon Legislature approved tough new payday advance restrictions in April. Now the city of Bend may decide to go still further. In this case, it should leave the job to the state.
Clearly, the process of applying for online cash loans is not high-finance banking - and payday lenders do not generally draw savvy, well-educated customers. Rather, women working their way off welfare, men and women in the military and others with little or no savings are most likely to borrow in this fashion.
Worse, they're least likely to be able to pay back the full payday loan when it comes due, and when they fail to do so and a loan is turned several times, they may find themselves paying as much as 400 percent interest rates as a result.
Things will get better for Oregon's payday, personal loan borrowers in about a year, when a new law kicks in that tightens things up considerably. At that time, lenders will be limited to interest rates of 36 percent annually. The number of times a payday loan may be reissued also will be limited, as will the amount that can be charged in fees.
In addition, lenders will be required to allow faxless payday loan borrowers at least 31 days to repay their loans in full. Meanwhile, the City Council will be asked whether or not it wants to go even further than the state. The city of Gresham already has done so, and the council will have before it the Gresham ordinance when it takes up the matter. It requires a special business license, allows a borrower to repay a cash loan in full within 24 hours of receiving it and sets other restrictions and penalties.
One argument in favor of adopting something like the Gresham ordinance is that the state law does not change until next year, and a city ordinance would provide interim protection until that happens. That may be, but this is a matter far better handled by the state than by the city.
Tightening rules in Bend simply would send quick payday advance lenders elsewhere in the region, perhaps making it slightly more inconvenient for would-be borrowers but not likely driving them out of the market completely. State regulations, on the other hand, will curb lenders' worst practices across Oregon, and from here, at least, even the most strapped individual is unlikely to drive to Idaho simply to get some quick cash.
