Oregon Payday Loans Capped By Senate
By Paul RizzoPayday Loan Writer
The Oregon State Senate officially voted this morning to crack down on out-of-state Internet payday loan lenders operating in Oregon by limiting the annual interest rate they charge to 36 percent.
House Bill 2203, which also regulates car title loans in Oregon, is part of a package of bills moving through the Legislature designed to eliminate the triple-digit APRs commonly charged by payday cash loan lenders in the state.
The Senate voted 20-10 in favor of the bill with no debate.
Sen. Brad Avakian, D-Bethany, a member of the Senate committee which sent the bill to the full Senate floor last week, briefly introduced the bill prior to the vote.
The House already passed it, but will vote again on minor amendments. The bill then goes to Gov. Ted Kulongoski, who has said he will sign it.
The bill regulates out-of-state payday advance and car title lenders making loans in Oregon through the Internet or by telephone or mail.
It requires that they charge an initiation fee of no more than $10 per $100 issued as a small payday cash loan and then no more than 36 percent on any extension or rollover of the loan.
The Legislature approved the same payday loan regulations on Oregon consumer lenders. They take effect July 1.
The measure approved Monday also gives the state Department of Consumer and Business Services authority to create an electronic tracking system so that payday advance and car title stores can check if an applicant for a cash advance owes money to other lenders.
Car title and payday loan lenders say the regulations will put them out of business. Most borrowers like their services, they say, and those with poor credit will have nowhere to turn if lenders leave.
The 360 Oregon payday loan stores, on average, charge a 528 percent APR on payday loans, for about $300 for 2-3 weeks.
That means that with three rollovers, a borrower would pay $240 in interest for a $300 payday loan. Oregon payday advance providers made 841,000 payday loans, including rollovers, in 2005.
Consumer advocates, religious leaders, food bank operators, the AARP of Oregon and other critics say an interest rate cap is needed to prevent payday and car title lenders from preying on vulnerable and desperate low-income Oregonians.
Some borrowers, unable to repay faxless payday loans, turn to a second lender to pay the first, and a third to pay the second, and so forth, as they sink down into a downward spiral of debt.
