Payday Loans in Oregon: Subprime Report

More than half a million Oregon residents live at or below the poverty line, and the Beaver State’s poverty rate of 13.3% is slightly higher than the national average of 12.7%. As a result, many Oregon residents who are in a financial pinch may look towards title and payday loans in order to help keep them in the black.

Unfortunately, when it comes to long-term financial health, these kinds of risky short-term loans can do more harm than good for the Oregonians who take them out. And while Oregon legislators and the state’s Attorney General have worked to make title and payday loans in Oregon better for borrowers, they are still a high-risk and pretty low-reward option for borrowers.

Before you take out a payday or title loan in Oregon, you should know all the facts. Understanding the subprime lending marketplace in Oregon can help you from falling into a cycle of debt that could take months, or even years, to get out of.

Median Household Income and Average Credit Card Debt in Oregon vs. Nationally
The U.S.
Average Credit Card Debt
Median Household Income

Payday Loans in Oregon

With 453 payday lenders scattered around Oregon, there are almost three payday loan stores for every McDonald’s restaurant in the state. That comes out to more than 13 payday lenders for every 100,000 residents, which is almost double what neighboring California, which has 7.24 payday lenders for every 100,000 residents, is working with, AND higher than the national average of 10 per 100,000.

Technically, the maximum amount a payday loan in Oregon can be is $50,000, but the vast majority of Oregonians will be unable to borrow that amount. Anyone who makes $60,000 or less is limited to borrowing up to 25% of their net (before taxes) monthly income. That means someone making $30,000 a year could take out a maximum of $625, which is a quarter of their $2,500 monthly salary.

The History of Payday Loans in Oregon

Payday loans in Oregon are regulated by statutes Chapter 725, Consumer Finance and Chapter 725A, Title and Payday Loans. These laws regulate the maximum loan amount, how long it can last, and the maximum amount a lender can charge in interest and fees.

In recent years, the biggest change to payday loans in Oregon came in 2007, when the interest rate was capped at 36%. The bill responsible for this cap was sponsored by then-state representative Jeff Merkley, who is now spearheading changes in the U.S. Senate that, if enacted, would help protect all Americans from untrustworthy online lenders. This law helped out Oregonian borrowers who at the time were paying, “an average 528 percent annual interest on their loans – typically $300 loans for two weeks,” Merkley said.

Another change to payday lending legislation in Oregon came in 2015, when the Oregon State Legislature passed a law that voided loans of $50,000 or less that were made by unlicensed lenders. While this law did help some payday borrowers, it primarily targeted unlicensed title lenders, a different kind of small loan which we address below.

Oregon Payday Loan Rules and Regulations

All payday lenders in Oregon need to be licensed under Oregon statute Chapter 725A. The Oregon Division of Financial Regulation has a webpage which allows potential borrowers to verify the license of a lender, but be careful: Once fees are taken into account, even legal and licensed payday lenders can charge an interest rate that could put your financial health at risk.

Although the official interest rate cap of 36% annually in Oregon helps borrowers, that limit doesn’t mean much once payday lending fees are added on. Borrowers must pay $10 for every $100 they borrow, with a maximum fee of $30. If you must take out a payday loan in Oregon, make sure they are licensed.

Quick Facts: Payday Loans in Oregon
  • Maximum Loan Amount:$50,000, or 25% of borrower’s net monthly income if they earn $60,000 per year or less.
  • Loan Term:31 to 60 days
  • Rollovers Permitted:Two (renewals)
  • Fees and Finance Charges:36% APR interest plus one-time fee $10 per $100 of the loan (max of $30)
  • Finance Charge on a 14-Day, $100 Loan:$13
  • APR on a 14-Day, $100 Loan:154% APR for 31 day loan
  • Maximum Number of Outstanding Loans at a Time:No limit
  • Cooling-off Period:7 days after prior loan expires
  • Collection Fees:$20 non-sufficient funds fee, plus additional bank charges

Title Loans in Oregon

While a payday loan uses your next paycheck as collateral, you must use your car as collateral in order to take out a title loan in Oregon. In Oregon, title loans are regulated by the same laws that regulate payday loans.

As a rule, borrowers should be very careful with title loans. In America as a whole, about 20% of people who take out a title loan have their vehicle taken away and sold to pay off the loan.

The History of Title Loans in Oregon

The history of title loans in Oregon mirrors the history of payday loans, with one big exception. While there are payday lenders in Oregon who are licensed to offer their services online, none are licensed for title loans. That did not stop some lenders from offering them anyway. One Oregon man who took out an online title loan ended up paying $15,000 on a $3,500 loan. This story, among others, prompted the Oregon State Legislature to pass a law in 2015 that voided loans of $50,000 or less that were made by unlicensed vendors.

Oregon Title Loan Restrictions

On their website, the Oregon Division of Financial Regulation warns consumers not to give their title to a lender who is not licensed in the state. They also instruct consumers not to give away any personal information before they agree to take out a loan. Borrowers should stay away from lenders that immediately ask for personal information – such as bank account or social security numbers – when a borrower has simply inquired about a loan.

Although the Oregon Legislature and the state’s Attorney General have made efforts to protect consumers, borrowers should stay away from loans that use their car for collateral. Under Oregon law, borrowers who miss even a single payment can lose their cars. Title loans are not worth the risk.

Quick Facts: Title Loans in Oregon
  • Maximum Loan Amount:$50,000, or 25% of borrower’s net monthly income if they earn $60,000 per year or less.
  • Loan Term:31 to 60 days
  • Rollovers Permitted:Two
  • Fees and Finance Charges:36% APR interest plus one-time fee $10 per $100 of the loan (max of $30)
  • Maximum APR:153.77%
  • Repayment Plan:Discretion of lender

Regulating Payday and Title Loans in Oregon

Oregon currently has strong laws to protect borrowers, but they could be better. You can help by fighting back against unfair lending practices. If you have been taken advantage of by a lender, notify the authorities through the links below. And make sure your voice is heard in Salem by contacting your local representatives.

Also, remember that there are no licensed online title lenders operating out of Oregon. Disreputable online title lenders prompted Oregon to invalidate small loans by unlicensed vendors in 2015, and also led Oregon US Senator Jeff Merkley to help introduce the Stopping Abuse and Fraud in Electronic (SAFE) Lending Act in the US Congress.

How to Report a Predatory Lender in Oregon

To report a predatory lender to the authorities, contact the Oregon Division of Financial Regulation:

You can also file a complaint with Oregon Attorney General Ellen F. Rosenblum:

Consumer Protection in Oregon

Oregon has done a lot to help protect consumers, but borrowers are still vulnerable. Borrowers can rollover their loans up to two times, which means they’ll end up repaying all the same fees over again, just to continue borrowing money they already borrowed. The Oregon Legislature and the Oregon Attorney General have gone after payday and title lenders, because borrowing money under these lenders’ terms are just not worth the risk. Oregonians would be better off heeding this warning.

Payday and Title Lending in Oregon Cities

Predatory lending in Oregon is a big issue for residents. And it gets even more complicated at the city level. Check out these payday and title loan guides to the following cities in Oregon:

PortlandSalem | Eugene

Works Cited