Oregon Introduces Hotline And Website Promoting Payday Loan Alternative

The Department of Consumer & Business Services says research shows many Oregon consumers have multiple payday loans and often extend the payback period, which means they are paying an exorbitant amount of money in interest rates and fees.

(SALEM) - Governor Kulongoski has announced a new consumer campaign – including a 1-800 hotline and web site – promoting payday loan alternatives and encouraging working Oregonians to avoid these high-interest loans.

"We’ve made real progress protecting hard-working Oregonians from high cost payday loans," said the Governor. "But these new tools will help get this important message out – there are better alternatives for consumers than payday loans charging up to 500 percent interest."

In April, Governor Kulongoski signed legislation establishing reasonable limits on payday lending charges to protect consumers from excessive price gouging. The law takes effect until July 2007.

The new tools offer consumers good information and options to avoid spiraling debt.

By calling 1-800-SAFENET or visiting www.211info.org, consumers can find information about payday loan products offered by Oregon credit unions with significantly lower interest rates and fees.

The website and 1-800 number can match consumers with credit unions they are eligible to join that offer the payday loan alternatives.

The 800 number and the website are maintained by SafeNet, which provides information to consumers about a wide variety of health and human services.

The Department of Consumer & Business Services and the Credit Union Association of Oregon are partnering with SafeNet to provide this new information to consumers about payday loan alternatives.

Many credit unions began launching their products two years ago, after Governor Kulongoski and DCBS asked them to offer consumers a less-expensive option for short-term loans. With interest rates often more than 500 percent, payday loans create financial burdens and credit problems for consumers.

As an alternative, credit unions average a $3 cost to the consumer for a 30-day, $200 loan.

If that consumer went to a payday lender for the same loan, the cost would be between $60 and $85.

"I appreciate the Governor’s leadership in protecting vulnerable consumers. And we are extremely pleased that Oregon’s credit unions are providing financially strapped consumers real options," said DCBS Director Cory Streisinger.

We applaud credit unions for working with us to offer consumers a better choice."

Consumers will save more than money when borrowing from credit unions, said Gene Poitras, president of the Credit Union Association of Oregon.

"Credit unions care about the financial well-being of their members and can work with borrowers to help them get out of debt," he said, adding that credit unions also can help consumers by offering financial education resources to avoid payday loans.

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Comments

Comments are Closed on this story.

CaraL April 18, 2009 1:52 pm (Pacific time)

This sounds great, but what will happen to the consumers who have bad credit? After all, that is one of the biggest demographics that find a Payday Loan to be helpful. With these nice "measures" in place to help "protect" consumers, I'm guessing it excludes those with bad credit. So again, it's great for someone to look for viable solutions, but when those solutions won't really help at least 50% or more of the people intended, they are really bad ideas. Never does a payday loan company care about your past credit like a traditional bank or credit union.

Debt Consolidation December 5, 2008 2:46 am (Pacific time)

Personal finance is a hard thing to manage at times. With so many tools at your disposal, like credit cards, payday loans, credit balance transfers, and many tips and tricks, negotiating your debt repayment is a must, though it may seem impossible. A payday loan is a small, short-term loan that you have to repay within a couple of weeks. You even have a few options with lenders over how long you take to pay it back--like if you need longer than a couple of weeks. You would typically use one to, say, cover the last hundred dollars of a car payment or a mortgage payment. You don’t want to be late on these, or credit card payments, as it will cost you upwards of $75 every time you are late. A payday loan, however, only costs $15 to $30 for each $100 taken out. It’s a far more viable option to take one out to cover a shortage in your payment funds than to pay late, and get $45 to $60 or more for late fees. Another idea is to transfer your credit balance, which can reduce your debt. If you have a decent credit score, and you can get 0 to 3% APR for the 6 months or whatever the term limit of the balance is, then you should do it. Also, it can pay to get in touch with your creditors, and let them know you want to do it. This just might prod them into competing for your business, and they can surprise you with what they are willing to do. Reducing your debt is critical for you to do, and paying only the minimums can keep you in debt for years to come. If you have debt problems, the sooner you act, the better, and the sooner you will begin to save. Click here to read more on debt consolidation, money saving tips and payday loans.

Lisa P November 9, 2008 11:25 pm (Pacific time)

If a person is short in cash and it happens that payday is still far ahead people would usually apply for loans or to be more specific payday loans. Payday loans have been in demand nowadays as it responds to the financial needs of every consumer. But as this industry is fast growing and because of tough competence in this business some payday loan companies began to lure their consumer into debt trap just to gain lots of money. The essence of payday loan is very good and that is to provide financial assistance to a person desperately need money but because of the evil attitude of some companies they began to destroy the good essence of payday loan. If a person wants to apply for a payday loan he must search first for information that could guide him about the pros and cons of having loans. Enough information could save a person from danger of debt. Read more on this topic Payday Loans.

Payday Loan Advocate October 6, 2008 10:29 pm (Pacific time)

The payday loan industry has been the key target for corrupt politicians, from all sides, seeking an increase in voter support at the expense of what’s best for the general public. Governors of several states including, Georgia, North Carolina, and Oregon completely drove payday loan businesses out of their states. The negative effects of driving out payday loan companies from these states, appears to have not been the best idea for its’ citizens. For instance, in Georgia, the bankruptcy filings, bounced checks and foreclosures all grew overwhelmingly after the cash advance option was taken away from them. In spite of this downbeat information, following the closure of payday loans in these states, several other governors continue to try and follow suit. Leading national politicians, such as presidential hopeful Barack Obama, are now making it their mission to eliminate the industry completely once and for all. Should such efforts be judged successful, the possibility is very real for increased unemployment rates, more debt, more foreclosures and an even more crippled economy.

Rachel July 2, 2007 3:51 pm (Pacific time)

They have to be used responsably and wisely. For example, right now I need gas money to get to work this week. I am going to borrow $100 so that I can make it to payday. When I get paid next I already know what bills are due and I can easily pay back the loan. If you don't think ahead than pay day loans will get you into trouble. But why should I be punished because someone else is financially ignorant? There is no such thing as free money. Pay day loans are a service and they cost money.

Abdulrasool June 6, 2007 8:06 am (Pacific time)

Here's actually a very interesting article http://www.3debtconsolidation.com/comparison.html that compares borrowing differences between payday loans, home equity lines of credit v/s cash advances on credit cards found at http://www.3debtconsolidation.com

mavines April 3, 2007 3:29 pm (Pacific time)

Write your comments here, please.

Tobias Beruf September 14, 2006 3:10 am (Pacific time)

But you have to pay for it so i can use the time for you.

pollyandsay August 3, 2006 7:13 pm (Pacific time)

Congratulations Oregon! You have good people working for you in your government. I have been building a blog over the past few months with the intent of it becoming a one stop research center on payday loans. Ultimately, I would like to see the payday loan industry extinguished in this country. Too many people fall into this madness, and it turns a bad financial situation, into a dire financial situation. Peace to all in Oregon!

Marie August 1, 2006 8:53 am (Pacific time)

Thanks for the story about payday loan alternatives. This is an example of the type of creative government/business partnership we need. Thanks to Governor Kulongoski and thanks to the Oregon credit unions for their leadership.

Stanley August 1, 2006 4:58 am (Pacific time)

I have been watching quite a few forums for last few years. I have seen most people fall in the trap of payday loans due to lack of knowledge that how costly these loans are. I met a community debtconsolidationcare.com where members have been trying hard to spread the truth about payday loans and often lenders attack board members verbally. Once people are aware about the truth behind payday loans, they won't suffer any more.

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