Sunday, July 15, 2007

Payday Advance Lenders Close Doorts

By Paul Rizzo
Payday Loan Writer

Sawbucks closed two of its three Klamath Falls locations in anticipation of the new state regulations that cap interest rates for payday loans.

The stores closed the last week of June.

Payday Lending There was previously no cap for loans, said Melissa Johnson, Sawbucks manager. “We’ve tried to work with our customers that used to have those higher loans.”

She is concerned about the impact on personal cash loan customers, saying many have no other lending options because of their credit histories.

Interest rate cap

The new law caps the interest rate at 36 percent, but also allows an origination fee of $10 per $100 loaned, though no more than $30 for any instant payday loan amount. Previous annual interest rates reached 520 percent.

Some stores, like QuickCheck are still open and have made changes to comply with the new law. Rent-A-Centers in Oregon closed all their financial services departments. Other stores, such as the Check ‘N’ Go chain, have closed several quick cash advance locations in Oregon. All three had locations in Klamath Falls.

“It was a fatal blow that the Legislature gave us,” said John Rabenold, corporate spokesman for Check ‘N’ Go.

Eventually, all 21 Check ‘N’ Go locations in Oregon will be closed. Some remain open while customers’ accounts are settled.

Jobs lost
About 60 employees of Oregon’s Check ‘N’ Go will lose their faxless payday advance jobs with the closures.

It’s unfortunate that the Legislature did not take into consideration the effect the new law has on employees or offer an incentive for retraining, Rabenold said. Closing two Sawbucks stores in Klamath Falls required laying off two employees. Both had been with the company for four years.

Johnson said because Sawbucks offers other services such as check cashing, Western Union, money orders and utility payments, the final store will probably remain open. Streamlining expenses will help, she said.

Meanwhile, she is researching impacts of a check cashing law that limits excessive fees of $5 or varying percentages from 2 percent to 3.5 percent, depending on what type of check is being cashed.

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