The Law Office of Kim Covington

Call For A Free 1-Hour Consultation
541-393-2790 | 800-673-1891

Please Ask For Kim Directly When Scheduling An Appointment

The dangers of payday loans

Payday loans are a seemingly simple way for people to get short-term loans in small amounts from private companies. They usually require that a person provide a personal check, authorization for a withdrawal from his or her bank account, or permission for the payday lender to debit the account in return for needed cash. Unfortunately, these loans are often difficult for already financially strapped workers to meet, and may make their situations worse.

Oregon is one of many states that limits the total amount of money that payday lenders can charge for each loan. The Department of Consumer and Business Services states that lenders are limited to charging no more than 36 percent interest per year, along with an origination fee that is up to 10 percent of the loan amount, capped at no more than $30. If the loan is renewed, these fees cannot be recharged. The only other charges a payday lender can collect are a $20 fee for bouncing one check, fees they must pay due to the bounced check, and any court awards they are given due to an unpaid loan.

The danger of payday loans is in the short terms and the high interest rates. Many people who resort to using these loans are financially unhealthy to begin with, and simply add to the debts that they are unable to pay. When they cannot pay the loan when it expires, they often must extend the loan, adding to their total interest, and continuing a cycle that is very difficult to break.

To make the situation worse, many businesses prey on lower income individuals illegally. According to State of Oregon Consumer Financial Protection, many payday lenders are not licensed, so those who choose to use these lines of credit are often charged excessive, illegal fees. These businesses may charge as much as $1,000 for a $300 loan, and when the debtors are unable to pay, they are not afraid of resorting to additional illegal tactics to get what they believe they are due.

No Comments

Leave a comment
Comment Information
email us for a response

Learn More About Your Fresh Financial Start

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

The Law Office of Kim Covington is a debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 19 years.

The Law Office of Kim Covington

The Law Office of Kim Covington
1445 Willamette Street, Suite 9
Eugene, OR 97401

Toll Free: 800-673-1891
Phone: 541-393-2790
Fax: 541-344-6466
Eugene Law Office Map

P: 541-393-2790

T: 800-673-1891

F: 541-344-6466