Oregonians for Payday Loan Fairness

You’d get a better deal from Tony Soprano

Here’s how payday lending works in Oregon:

Payday lenders require no credit checks or proof of ability to repay the loan. They don’t weigh the money they are lending against other obligations the borrower may have. They keep it deceptively simple.

Getting the loan: Borrower provides a pay stub and identification, then writes a post dated check to the payday lender for an amount to cover the loan and the fee. For example, if the borrower needs $300, they write a check for $360 and post dates it to their next payday. That’s equivilent to 521 percent annual interest.

Paying the loan: After two weeks, the payday lender cashes the $360 check and the money is taken out of the borrowers bank account.

How people get trapped: After two weeks, a borrower who cannot pay off the loan may pay another $60 to extend it two weeks. That’s called a “rollover” and it’s where the big money is for the payday loan industry. Current Oregon law allows up to three rollovers.

Two-thirds of borrowers don’t have the money to pay off the loan when it comes due on their next payday so they pay more fees to rollover the loan.

Total bill for borrowing $300 for 8 weeks: $540.

What’s going on currently?

To get the scoop of what’s going on currently in the Salem and elsewhere click here.

Fast facts on payday lending in oregon

Triple-digit interest of up to 521%. Oregon is one of only 5 states that have laws regulating payday lending but have no limits on payday loan interest.¹
Impossibly short loan terms. Payday lenders demand repayment by the next payday, giving borrowers as little as two weeks to pay back the loan.
More fees, more fees, more fees. The majority of borrowers cannot pay in two weeks so they have to pay another 521% to extend the loan for two more weeks².
Aggressive collection tactics. Payday lenders hold a live check which they can deposit before the loan is due triggering bounced check charges. In the last five years, payday lenders have filed over 12,000 lawsuits against borrowers in Oregon.
Big profits for payday lenders. Most of the storefronts are owned by national companies. In 2005 the industry pocketed $6 billion in fees on loans totaling $40 billion. The 6 publicly traded companies reported a 24% increase in loan volume from 2004 to 2005³.
Predatory Payday lending is growing. There are more payday loan shops in Oregon than Starbucks and Seven-Elevens combined.
People take out payday loans for basic needs. The top reasons: to pay bills, buy groceries and cover medical costs. Payday lenders take advantage of people just when they need help the most².
The payday loan industry has one of the richest and most powerful lobbying teams in Salem. Last year, the industry spent $221,000 blocking legislation to rein in predatory lending⁴.

¹ National Conference of State Legislatures. ² State of Oregon Department of Consumer and Business Services, Policy Review of Consumer Finance and Payday Lending (pdf, 5.5mb). ³ Associated Press, May 22. 2006 Borrowers keep returning for payday loans. ⁴ Lenders, lobbyists likely to keep fighting payday loan limits The Oregonian

Payday Loan Fairness: [x] Yes, [] No

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