Lenders close as rate capped
- PUBLICATION: The Vancouver Sun
- DATE: July 10, 2007
PORTLAND -- Scores of Oregon payday and car title lenders have closed their doors as a 36-per-cent interest-rate cap and other new regulations took effect last week.
Gone are the 520-per-cent annual interest rates that were common among payday lenders before the Legislature recently passed new regulations. Gone, too, are many of the lenders. But among those who remain, borrowers will find their small, short-term loans cost about a third of what they cost before.
At least 60 payday loan stores have closed or surrendered their licenses since June 1, says Charles Donald, supervising examiner at the state Department of Consumer and Business Services.
Advance America, Cash Advance of Spartanburg, S.C., the largest payday loan company in the U.S., is evaluating whether it can keep its 45 Oregon stores open, said Jamie Fulmer, a spokesman for the company. "The economic situation that exists in Oregon currently is one that we think is prohibitive," Fulmer said.
Northwestern Title Co., based near Atlanta, has stopped making car title loans in its 17 Oregon stores, which it is preparing to close, said Ken Wayco, president. Car title loans are similar to payday loans except they use car titles rather than the borrower's next paycheck as collateral.
Northwestern recently filed a lawsuit challenging the constitutionality of the new law that caps interest at 36 per cent for all consumer loans.
"Unless we prevail in the suit there, we're all out of business," Wayco said.