Payday Loans in Oregon: Are They Legal and How Do They Work?

Oregon residents can technically take out a small-dollar, high-cost payday loan if they’re facing a financial emergency, like a utility shutoff or immediate eviction, and can’t otherwise obtain the funds. But it’s worth considering all options. 

Despite restrictions, payday loans in Oregon carry an average annual percentage rate (APR) equivalent to 140%, according to the Center for Responsible Lending (CRL).

MoneyLion offers a service to help you find personal loan offers. Based on the information you provide, you can get matched with offers for up to $100,000 from our top providers. You can compare rates, terms, and fees from different lenders and choose the best offer for you.

Are payday loans legal in Oregon?

Payday loans are legal in Oregon, though they’re highly regulated. Under state usury laws, payday lenders must:

• Give borrowers at least 31 days and no more than 60 days to repay

• Charge no more than one origination fee of 10% or $30 (whichever is less)

• Cap annual interest rates at 36% and APRs (fees, plus interest) at 153.77%

• Provide a written loan agreement that clearly outlines the fees, APR, payment due dates and default repercussions

• Offer no more than two loan renewals or rollovers

• Abide by a 7-day cooling off period after a loan is repaid; during that window, the lender can’t issue a new loan.

• Must allow a borrower to convert a loan to an extended repayment plan (EPP) once they’ve exceeded the maximum amount of loan renewals and are in danger of default

To legally offer payday loans in Oregon, businesses must be licensed with the state’s Division of Financial Regulation. Unlicensed payday lenders, including those online, are operating unlawfully.

How payday loans work in Oregon

Outside of these borrowing restrictions, payday loans in Oregon technically work as they would across other permissive states. 

• You complete an application online or in-store. Most lenders typically  require a valid government ID, Social Security number, proof of income, a valid email address and an active bank account. They typically skip a traditional credit check or utilize notably lenient underwriting standards.

• You review your offer and agree upon a due date, legally between 31 days and 60 days after its issue date. That due date reflects when you’re authorizing the lender to cash a post-dated check or directly debit your bank account for the total borrowed amount. They might permit other forms of payment.      

• You sign the loan agreement and receive funds, usually through direct deposit, in-store cash pickup or a preloaded debit card.

• You repay the loan on its due date via automatic bank withdrawal or another agreed-upon method. If you can’t do so, you can request up to two loan renewals. It’s best to call your lender directly to discuss options, like an extended repayment plan, if you suspect you’ll be unable to cover the funding.       

The risks and dangers of payday loans

Payday loans, by definition, are small-dollar loans with short repayment windows and notably high fees or interest. A typical two-week payday loan charges $15 per each $100 borrowed, the APR equivalent of 400%, according to research from the Consumer Financial Protection Bureau (CFPB).

These characteristics leave borrowers vulnerable to defaults or potential debt cycles in which the inability to repay leads to loan renewals, additional fees and mounting borrowing costs. 

While Oregon’s restrictions help mitigate these risks, payday loans in the state still carry these dangers:  

• The lack of a traditional credit check means borrowers could receive funds they can’t hope to repay.

• APRs can reach 153.77%, which is still quite pricey. A $300 payday loan, for instance, could cost you as much as $39.17 in fees and interest.

• Automatic loan withdrawals could trigger a number of bank fees and even account closure.

• Defaults can lead to collection efforts, including lawsuits, judgments and wage garnishments. These actions can wreak havoc on your finances and credit score.

How to avoid the payday loan trap

You could lower your odds of having to take out a payday loan in Oregon with these steps:

• Start an emergency fund with an eye toward setting aside at least three to six months’ worth of expenses to cover an unexpected job loss or cash shortfall. Ways to save include setting up automatic rollovers from your checking to savings accounts, using round-up apps and selling used goods on online marketplaces.  

• Establish a credit history by taking out a credit-builder loan. This starter line of credit operates like a secured loan and a certificate of deposit. It helps you demonstrate an ability to make timely monthly payments on financing. You can learn more about credit-builder loans with a MoneyLion Credit Builder Plus membership. 

• Pause before borrowing to consider if there are other ways to address funding gaps. For instance, medical providers are often willing to negotiate the amount and repayment terms of outstanding medical bills. Utility companies also may offer hardship programs. It could prove worthwhile to call service providers before taking out a payday loan.

When a payday loan might be the only option

A payday loan might be the only option for Oregon residents if they’re in a serious financial bind, have poor credit or high existing debts, and can’t qualify for traditional financing, state cash assistance programs or other safer payday loan alternatives.

Financial emergencies that could necessitate a small-dollar, short-term loan include:

• Car repairs that would enable you to return to work 

• A rent shortfall that would lead to immediate eviction

• Urgent and potentially life-saving medical procedures or prescriptions

• Loss of child care that would stop you from working

• Travel that can’t be avoided due to a family crisis

If you must take out a payday loan, you can minimize potential financial harm by developing a strong repayment plan, understanding the consumer protections your state provides and limiting interim expenses so you have enough money in your bank account to cover automatic repayment withdrawals.

Safer alternatives to payday loans

Credit cards

Credit cards have lower interest rates than payday loans, with the average currently hovering around 21%. You might be able to leverage a credit card’s grace period, which typically gives you around 21 days to make and pay off purchases without accruing interest. 

Earned wage access

Earned wage access (EWA) is a service that lets you tap accrued wages in between paydays. They often charge no interest or low fees and require no credit check. Providers deduct the early wages from your next paycheck.

Instacash, an EWA product from MoneyLion, allows access to up to $500 in wages fee-free within 1 to 5 business days.

Personal loans (banks or credit unions)

Small community or regional banks sometimes offer traditional personal loans with relatively low borrowing minimums and competitive APRs. Oregon Coast Bank and Clackamas County Bank advertise unsecured personal loans on their websites.

If you have so-so finances, you can explore getting a personal loan online from lenders known to accept applicants with bad credit. 

Payday alternative loans (PALs)

As part of a broader initiative, many credit unions now offer small-dollar loans with lower APRs, more flexible repayment terms and relaxed underwriting criteria as a direct alternative to payday lenders. 

Oregon State Credit Union, Embold Credit Union, OnPoint Community Credit Union and Cutting Edge Credit Union are among the Beaver State cooperatives offering these products, known as payday alternative loans (PALs), to members.

State-specific assistance programs

Oregon has many state-sponsored cash assistance programs that can help during financial hardship. These include:

• Oregon Temporary Assistance for Needy Families (TANF) provides cash assistance to parents and caregivers who meet set income limits.

• The General Assistance Program provides short-term housing assistance to people with severe disabilities facing homelessness.

• The Low-Income Home Energy Assistance Program (LIHEAP) and Oregon Energy Assistance Program (OEAP) help eligible residents pay their utility bills.  

Some communities offer additional support. Clackamas, Multnomah and Washington counties, for example, have rental assistance programs.  You can dial or visit the 2-1-1 website to find more programs in your area.

Borrowing from family and friends

It could prove worthwhile to ask a close friend or family member to lend you enough to cover the emergency, as they’re likely to charge you no or low borrowing fees. Having a clear ask and firm repayment proposal can help ensure the relationship remains intact. 

Side hustles

Quick online freelancing gigs or babysitting jobs could help you generate the extra income needed to avoid payday loans and their associated fees and interest. A longer-term side hustle, like driving for rideshare apps or setting up an Etsy store, could help you bolster and maintain emergency savings.

Conclusion

Payday loans in Oregon remain legal, but they’re heavily regulated by state usury laws, which require minimum and maximum repayment terms, transparent loan agreements, mandatory cooling-off periods, and caps on fees, interest and loan renewals.

Despite these restrictions, payday loans remain expensive relative to traditional financing and risky, as defaults can damage your credit and bank account. It’s still a good idea to explore alternatives, like EWA products, state cash assistance programs and personal loans from small banks or credit unions. 

FAQs

What is the maximum loan amount I can borrow in Oregon?

Oregon doesn’t have a legal maximum loan amount. However, it defines payday loans as loans of $50,000 or less. Most payday lenders offer small-dollar amounts, typically between $100 and $1,000. 

What fees and interest rates can payday lenders charge in Oregon?

Payday lenders in Oregon can charge origination fees of up to 10% of the borrowed amount or $30 (whichever is less) and interest rates of up to 36%. Payday loan APRs in the Beaver state (total fees, plus interest) can’t exceed 153.77%.

How long do payday loans last?

Payday loans in Oregon, by law, must offer a minimum repayment term of 31 days and a maximum repayment term of 60 days. Traditionally, payday loans last from one paycheck to the next, or a 2- to 4-week period. 

Will a payday loan affect my credit score?

A payday loan might affect your credit score if you can’t repay and the lender moves to recoup the debt. At that point, adverse actions, like debts in collection or lawsuits resulting in wage garnishment, can appear on your credit report and damage your credit score. Payday loans rarely have a positive impact on your credit as lenders don’t typically report timely repayments to the credit bureaus. 

Can I get a payday loan with bad credit?

You can get a payday loan with bad credit in Oregon, as the state permits this loan type, albeit with restrictions, and most lenders either skip a traditional credit check or impose loose lending standards. It’s best to explore alternative funding options; however, given the still relatively high costs and risks associated with Oregon payday loans.

What should I do if I can’t repay my payday loan on time?

If you can’t repay your payday loan, contact your lender directly and ask about an extended repayment plan (EPP). Oregon requires payday lenders to offer EPPs after you’ve exceeded two loan renewals and are in danger of defaulting. 

Sources

• Responsiblelending.org - Center for Responsible Lending

• Fred.stlouisfed.org - Commercial Bank Interest Rate on Credit Card Plans, All Accounts (TERMCBCCALLNS)

• Oregon.gov - Oregon Temporary Assistance for Needy Families (TANF)

• Oregon.gov - The General Assistance Program

• Portlandgeneral.com - Oregon Energy Assistance Program (OEAP)

• Multco.us - Rental Assistance Program

• Oregonlegislature.gov - Chapter 725A — Short-Term Loans and Student Loan Servicing

• Dfr.oregon.gov - Payday and title lender licensing 

• Consumerfinance.gov - What is a payday loan? 

• Dfr.oregon.gov - Would you pay $1,000 for a $300 loan?