By LAUREN L. DILLARD
Of The News-Register
Following a statewide trend, bright neon signs marking the presence of payday and title lenders will soon go dark in at least six of the nine McMinnville outlets.
They are closing up shop in response to moves during the Oregon Legislature's 2006 special session and 2007 regular session imposing new restrictions, including one capping annual interest at 36 percent. The legislation went into effect July 1.
Shutting their doors locally are Allied Cash Advance, Cash ASAP, The Cash Store, Check N' Go, US Title Loans and Northwest Title Loans. Advance America and United Finance plan to remain in operation and American General refused to say.
That mirrors a statewide trend, according to The Oregonian, which conducted a survey indicating at least 60 outlets are going out of business.
In a July 9 story, the Portland newspaper said payday and title lenders are currently charging annual percentage rates averaging 528 percent. Other states have enacted so-called predatory lending protections capping APR at levels ranging from 264 to 300 percent, it said, but Oregon is the first to adopt such a strict limit.
"Unfortunately, far too often, those who can least afford to wind up paying the highest price for financial services - shortchanging their paychecks and sometimes creating an insurmountable cycle of debt," Gov. Ted Kulongoski said in a statement marking the signing of the legislation. He termed it an important consumer protection measure.
Naturally, the lenders don't see it that way. The rates they charge may seem stratospheric when stated in annual terms, they said, but they specialize in loans of such brief duration that it's the only way they can come out.
Under Oregon's new 36 percent cap, complained Osjha Anderson of Northwest Title Loans, "We'd be running a charity. We would be giving money away."
Anderson, who serves as director of governmental affairs at corporate headquarters, said the company is closing all 17 of its Oregon outlets. She said that will mean loss of 50 full-time jobs with benefits, including two in McMinnville.
The military also has enacted a 36 percent cap, but has established a number of exceptions. "Oregon has gone with a very broad, comprehensive approach with its bill," Anderson said.
That view was echoed by Jamie Fulmer, a corporate officer with Advance America.
"The new law is very restrictive, if not all together prohibitive," Fulmer said. "The law, as it is, does not allow us to sustain a business model."
However, at least for now, the company plans to continue operating in McMinnville and its other Oregon locations.
To what extent that will hurt consumers is open to debate.
John Larsen, chief lending officer at First Federal, said they would generally be better off dealing with traditional lenders anyway.
"I don't think it's good for the consumer," he said of the payday and title loan approach. "There are so many other ways to solve the problem," he said.
Larsen said First Federal offers $15,000 loans at 12.15 APR. No collateral is required for qualified applicants, he said, though income and credit history have to hold up to scrutiny.
However, payday lenders term that unrealistic. They said there is a huge demand for short-term loans to deal with needs cropping up in the course of everyday life.
"When we are gone, our customers are still going to need the tires replaced on their car," Anderson said. "Those problems will not go away."
The legislative package consists of House bills 2202, 2203, 2204 and 2871, signed by the governor on June 19. In addition to limiting paycheck advance and title loan interest, they limit cashing fees to 3 percent on payroll checks, 10 percent on personal checks or $5 if the fee would otherwise fall below that.
The two members of Yamhill County's legislative delegation, both Republicans, split on the bills. Sen. Gary George opposed them while Rep. Donna Nelson supported them.
