71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 3941
House Bill 3907
Sponsored by Representative V WALKER (at the request of Oregon
Consumer League)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Sets maximum annual rate consumer finance company may charge
above principal on certain short-term personal loans.
A BILL FOR AN ACT
Relating to consumer finance; creating new provisions; and
amending ORS 725.010 and 725.340.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 725.010 is amended to read:
725.010. As used in this chapter:
{ + (1) 'Check' means any check, draft, money order, personal
money order, traveler's check, warrant or other instrument for
the transmission or payment of money. + }
{ - (1) - } { + (2) + } 'Department' means the Department
of Consumer and Business Services.
{ - (2) - } { + (3) + } 'Director' means the Director of
the Department of Consumer and Business Services.
{ - (3) - } { + (4) + } 'Licensee' means every person
licensed under this chapter.
{ + (5) 'Payday loan' means a loan of money secured by a
personal check dated as of the date of the loan or later, in an
amount of the principal of the loan plus a fee or charge assessed
by the lender, for which insufficient funds to cover the check
may or may not be on deposit in the account upon which the check
is drawn at the time of the loan.
(6) 'Person' means an individual, partnership, association,
joint stock association, trust, corporation or other, but does
not include the United States Government or the government of
this state.
(7) 'Return' means payments other than principal made to the
lender as a result of an agreement to repay a short-term personal
loan. 'Return' includes, but is not limited to, interest, late
fees and default charges. 'Return' does not include reasonable
attorney fees incurred by the lender.
(8) 'Short-term personal loan' means a noncommercial loan of
nine months or less in duration. 'Short-term personal loan '
includes, but is not limited to, payday loans, title loans and
any other loan designated by rule or order of the director.
(9) 'Title loan' means a loan, other than a purchase money
loan, secured by the title to a motor vehicle, recreational
vehicle, boat or mobile home. + }
SECTION 2. ORS 725.340 is amended to read:
725.340. (1) { + Except as provided in subsection (3) of this
section, + } a licensee may charge, contract for and receive any
interest or consideration for loans, secured or unsecured, as
agreed upon by the licensee and the borrower.
(2) When a precomputed loan contract is originally scheduled to
be repaid in 62 months or less and requires repayment in
substantially equal or consecutive monthly installments of
principal and interest combined, the interest or consideration
may be precomputed, contracted for and earned on scheduled unpaid
principal balances on the assumption that all scheduled payments
will be made when due. In such cases, every payment may be
applied to the combined total of principal and precomputed
interest until the contract is fully paid, and the acceptance or
payment of interest or consideration on any loan made under the
provisions of this subsection shall not be deemed to constitute
payment, deduction or receipt thereof in advance. Such
precomputed interest or consideration shall be subject to the
following adjustments:
(a) When a default of more than 10 days in the payment of any
scheduled installment occurs, the licensee may charge and collect
a default charge not exceeding five percent of the unpaid amount
of the installment or $5, whichever is less. A default charge may
be collected only once on an installment, but may be collected at
the time it accrues or at any time thereafter. No default charge
may be assessed with respect to an installment which is paid in
full on or within 10 days after a scheduled installment due date
when an earlier maturing installment or a default or deferral
charge on an earlier maturing installment may not have been paid
in full even though all or part of such installment payment is
applied to an earlier maturing installment, or a default or
deferral charge.
(b) If the payment of all unpaid installments is deferred one
or more full months, and if the contract so provides, the
licensee may charge and collect a deferral charge not exceeding
the annual percentage rate previously disclosed to the borrower
pursuant to the Federal Consumer Credit Protection
(Truth-in-Lending) Act applied to the sum of the installments
deferred for the length of the deferral period. The deferral
period is that period in which no scheduled installment is
required to be paid by reason of the deferral. Such charge may be
collected at the time of deferral or at any time thereafter. A
deferral charge may not be made for the deferral of any
installment with respect to which a default charge has been
collected, unless the default charge is deducted from the
deferral charge. If prepayment of the loan in full occurs during
the deferral period, in addition to any other rebate which may be
required, the borrower shall receive a rebate of the portion of
the deferral applicable to the unexpired months in the deferral
period, for which purpose a fraction of an unexpired month
exceeding 15 days shall be deemed to be a month.
(c) Upon prepayment in full of the unpaid balance of a
precomputed loan, a rebate of unearned interest or consideration
shall be made as provided in this paragraph. The amount of the
rebate shall be not less than the total interest contracted for
to maturity, less the greater of:
(A) Ten percent of the amount financed or $75, whichever is
less; or
(B) The interest or consideration earned to the installment due
date nearest the date of prepayment, computed by applying the
simple interest rate of the loan to the actual principal balances
outstanding, for the periods of time the balances were actually
outstanding. For purposes of rebate computations under this
subparagraph, the installment due date preceding the date of
prepayment shall be considered to be nearest if prepayment occurs
15 days or less after that installment date. If prepayment occurs
more than 15 days after the preceding installment due date, the
next succeeding installment due date shall be considered to be
nearest to the date of prepayment. In determining the simple
interest rate, the licensee may apply to the scheduled payments
the actuarial method, by which each scheduled payment is applied
first to accrued and unpaid interest or consideration, and any
amount remaining is applied to reduction of the principal
balance.
{ + (3) For a short-term personal loan of $50,000 or less, a
licensee may not charge, contract for or receive an annual return
of more than 36 percent of the principal amount of the loan. + }
{ - (3) - } { + (4) + } If the borrower agrees to perform
certain duties to insure or preserve the collateral and fails to
perform those duties, the licensee may pay for the performance of
those duties and add the amounts paid to the unpaid principal
balance. A charge may be made for sums advanced, at the rate
provided for in the loan agreement.
{ - (4) - } { + (5) + } The loan contract may provide that
after default and referral the borrower shall pay the licensee
for reasonable attorney fees actually paid by the licensee to an
attorney not a salaried employee of the licensee.
SECTION 3. { + The amendments to ORS 725.010 and 725.340 by
sections 1 and 2 of this 2001 Act apply to short-term personal
loans made on or after the effective date of this 2001 Act. + }
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