More Must Be Done to Control Payday Loans
By Paul RizzoPayday Loan Writer
What does the editorial board of The Walla Walla Union-Bulletin think about payday loans? Here is a paraphrased answer:
What would you call it if a person gets a loan and then is charged an interest rate that averages 528 percent or that hits 2,551 percent?
Images of knee-breaking loan sharks pop to mind. But in Oregon it’s just another day at the office for payday loan and car-title lenders.
The Oregon Legislature understood these businesses were dooming many citizens to fall deeper into debt. These individuals were those who could least afford to shoulder additional financial burdens. So it passed a law to cap interest at 36 percent, beginning in July.
Thirty-six percent is still high, but it was a first step. However, the cap won’t apply to car-title lenders, who make short-term cash loans using car titles rather than future paychecks as collateral.
And, according to The Associated Press, a fourth of payday lenders have applied for conventional consumer licenses, which allows them to restructure payday loans into small installment loans and continue to charge the high interest rates.
“We think consumers should be allowed to make decisions about what loans are right for them, and the market should set the rate,” Luanne Stoltz, a quick payday advance lender and vice president of the Consumer Financial Services Association, told the AP.
Generally speaking, competition can regulate the marketplace. But when people are being gouged, the government has an obligation and a responsibility to step in.
Oregon is on the right path when it comes to online payday loans. It needs to keep moving to deal with this insidious practice.
