Judge to rule Monday on suspending Oregon interest rate cap

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Story Published: Jun 29, 2007 at 11:58 AM PST

By AARON CLARK Associated Press Writer

SALEM, Ore. (AP) - A judge said he would rule Monday on whether to suspend a new Oregon law that caps annual interest rates on consumer loans at 36 percent.

Northwestern Title Loans, a Georgia-based car title lender with 17 stores in Oregon, asked Marion County Circuit Judge Paul Lipscomb to suspend the law for 10 days. It was scheduled to go into effect July 1. The company hopes a court eventually will throw out the law.

An attorney for Northwestern argued Friday that the law singles out car title lenders, forbidding them to make high-interest, short-term loans, but does not apply to federally regulated banks and credit unions.

"The infirmity is that it has created an unequal playing field," said Joel Mullin. "We are talking about the same types of products."

The law passed at the just-concluded legislative session limits the interest rates to 30 percentage points above the Federal Reserve discount rate, now at 6.25 percent, on consumer loans of less than $50,000.

The state argues that it has authority to treat consumer lenders differently from banks and credit unions.

Car title lenders make small loans using car titles as collateral and commonly charge more than 300 percent annual interest.

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