05/04/2007

Associated Press

Taking aim at triple-digit interest rates charged by payday and car title lenders, the Oregon House approved a bill on Thursday to cap interest rates at 36 percent on state-regulated consumer loans less than $50,000 and close a loophole in the current law.

The measure follows laws passed last in a special legislative session last year that put a 36 percent cap on short-term payday loans.

That law does not take effect until July 1, but House Speaker Jeff Merkley said short-term lenders have already begun to seek loopholes in the new law.

For example, a typical 60-day loan subject to the 36 percent cap could be offered without that cap if the lenders simply converted it to term of 180 days or more.

The bill, which was approved by a 37-21 vote and now goes to the Senate, is designed to close that loophole, Merkley said.

The Portland Democrat said that "triple-digit interest rates inflict great harm on our families and communities."

He said he heard one woman's story during a recent meeting with constituents.

"Her husband took out a very small loan, a couple hundred dollars, and ended up with thousands of dollars in debt," Merkley said. "They suffered for years trying to figure out how to pay it off and survive."