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Bills bear short-term loan cap Victim says $130 cost $560 to borrow By PETER WONG SALEM -- For Nicole Gambaro, it began as a quick loan of $130 that enabled her to buy prescription medication needed during her pregnancy. But that simple loan ended up costing her and her husband, Eric, more than $560 in interest and fees over more than a year's time. Their original post-dated check for the loan was $150. Now Gambaro, who's from Junction City, says the Oregon Legislature should do something to curb the easy availability of short-term, high-interest payday, check-cashing and car-title loans. "We got stuck for a year," she said Wednesday. "Every other paycheck, we would have to flip over the loan, and we got charged a fee every time. Finally, we could not do it any more and make the other bills and mortgage." According to the state Division of Finance and Corporate Securities, Oregon now has 99 offices that offer "payday loans" secured by post-dated checks, 17 offices that offer title loans, and 26 that offer both. Medford has eight offices, and Grants Pass one, that offer "payday loans." All have been established in the past year. Sylvia Caley, a lobbyist for the Oregon Law Center, said it would be difficult to ban them outright. "At a minimum, this needs to be regulated," she said. "But too many clients cannot walk into a bank and get a loan." They spoke at a news conference called by some legislators to call attention to bills that are moving -- or not moving -- through committees. Oregon lifted most caps on interest rates in 1981. Senate Bill 850 would put businesses that make title loans under Oregon's pawnbrokers law, which limits interest rates to 3 percent per month. Senate Bill 851 would bar consumer finance companies from making title loans. Among their sponsors are three Southern Oregon Republicans, Lenn Hannon of Ashland, Bill Fisher of Roseburg and Veral Tarno of Coquille. "I think a business can make money without taking unfair advantage of someone," Hannon said. Their chief sponsor is Sen. Frank Shields, D-Portland, who said his aim is to regulate car-title loans. "When you default on a payday loan, you damage your credit record and lose a large amount of money," he said. "But when you default on an auto-title loan, you have lost your car, which typically is five times the value of the loan you receive." The bills are assigned to the Senate Business and Consumer Affairs Committee, which is expected to take them up in a few weeks. House Bill 3533, a broader bill that would set new licensing requirements for check-cashing and title-loan businesses, sits in the counterpart House committee without a hearing. Unlike the Senate bills, it also would limit interest and fees they can charge. "I am interested in making sure that Oregon does not become a mecca for what has become a rage across the nation to take advantage of those who cannot or do not qualify for loans through commercial institutions," said its sponsor, Rep. Vicki Walker, D-Eugene. These businesses have banded together as the Oregon Community Financial Services Association. "There are clearly some problems that need to be addressed," said its lobbyist, Fred Van Natta. "We need to develop an equitable regulatory scheme that is fair to all parties, but it doesn't have to be legislative." But Assistant Attorney General Peter Shepherd said the state has no authority to deal with such loans or credit extensions under the Unfair Trade Practices Act, so it gets few complaints. The state also cannot limit interest rates under current law. Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA