Senate Passes Interest Rate Cap on Consumer Loans

Legislation will protect consumers from high interest predatory lending practices.

Oregon state capitol Photo by: Bonnie King

(SALEM, Ore.) - The Oregon Senate today passed House Bill 2871, legislation that caps the interest rate on state-regulated consumer loans to 36 percent or 30 percent above the Federal Reserve discount rate, currently 6.25 percent.

The new cap will protect thousands of Oregon citizens from extraordinarily high interest rates that are associated with car title and payday loans.

“Consumers in Oregon deserve protection from predatory interest rates that make a difficult situation worse for those who need these loans,” said Senator Floyd Prozanski (D-Eugene). “This legislation is basic consumer protection for those who need it the most.”

House Bill 2871 comes as a follow up to legislation passed in the 2006 special session that addressed predatory lending practices in the payday loan industry.

While the protections passed in the special session helped consumers, many businesses looked for loopholes to continue charging extraordinary interest rates on small loans.

House Bill 2871 will address that issue by providing a cap for all consumer loans regulated by the state.

“Oregon families that find themselves in difficult financial times shouldn’t have to be victims of predatory lending,” said Senator Margaret Carter (D-Portland). “All Oregon families deserve fair lending practices.”

House Bill 2871 follows recent Senate passage of House Bill 2203 and 2204 and completes a package of legislation that will provide greatly improved protection for Oregonians from predatory lending practices.

House Bill 2871 will now move back to the House for a concurrence vote.