Oregon Payday Advance Legislation Moves to House Floor
By Paul RizzoPayday Loan Writer
Proposals to close loopholes in tough new restrictions on easy payday loan lenders are headed for the House floor, after winning approval from members of the House Consumer Protection Committee Wednesday.
Among other measures, the new rules would limit the maximum rate of interest on car title loans to 36%, a big change on rates that can run more than 300%.
Proposals under consideration would also prohibit providers of no faxing payday loans from avoiding the state’s caps on interest rate charges by applying instead for a different type of license that applies to longer-term installment loans, which hadn’t been subject to interest rate caps.
The new legislation follows action in last year’s single-day special session, when lawmakers approved restricting charges on short-term loans and a 36% interest cap on loans that are renewed.
The payday loan industry, which makes small loans as advances on paychecks, has been growing exponentially in Oregon; there are now at least 350 such outlets.
A report from the state Department of Consumer and Business Services said payday lenders made more than 840,000 loans in 2005, a 15% increase over the previous year. More than 100,000 Oregonians had problems repaying such loans in 2006, according to state estimates.
Critics have argued that interest rates on such loans need to be tightly regulated, or else borrowers can be trapped in an endless spiral of debt. But those in the no credit check payday loan industry have said they fill an important niche for the thousands of Oregonians who don’t have a checking account and a bank, and the new rules could drive them out of business, as well as lead to a rash of bounced checks.
Other proposed rules that won the endorsement of the Consumer Protection committee Wednesday included:
- Development of a state database lenders can tap into to track whether potential borrowers have outstanding loans, and if so, how many.
- Limit fast cash loans against car titles to terms of less than 31 days.
- Extending the interest rate caps to Internet-based and out-of-state lenders.
“This is good news for consumers,” said Laura Etherton, a consumer advocate for the Oregon State Public Interest Research Group, or OSPIRG. “All these bills protect consumers from sky-high interest rates.”
But longtime Salem lobbyist Alan Tresidder, who advocates for Northwest Title Loan Company, a national car title lending chain, said some of the proposals could “put the title loan business in Oregon out of business,” including proposed new limits on how much car title personal loan companies can charge for upfront fees.
The proposed changes now move to the House floor.
