Oregonians hurt by rate cap law
November 12, 2008 | Oregon, industry, research, states | Comments (0)A new study by Dartmouth economist Jonathan Zinman says that Oregonians suffered after payday lenders left the state following passage of the 36% rate cap law. From the news release:
Survey data on 400 payday loan users collected before and after the imposition of an interest-rate cap in Oregon suggest that the cap caused deterioration in the overall financial condition of the Oregon households. The results suggest that restricting access to expensive credit harms, rather than helps, consumers.
The study, conducted by Prof. Jonathan Zinman of Dartmouth College, seeks to evaluate the effects of interest-rate and loan-term restrictions imposed by the State of Oregon in 2007. Previously, payday lenders had been charging borrowers at least $15 per $100 for two-week loans; effective July 1, 2007, the maximum finance charge that can be imposed on Oregon borrowers is approximately $10 per $100, with a minimum loan term of 31 days. The effective yield to lenders was reduced by two-thirds as a result of the new regulatory scheme.
The advocacy groups always say there are other lenders ready to step into the void. Could it be that they don’t know what they’re talking about?
Here’s a link to the study.
