In the state of Oregon, consumer credit is regulated by laws specified in the Oregon Revised Statutes. Chapter 725 of the Oregon Revised Statutes contains sections dealing with consumer finance, including those regarding the licensing of consumer finance providers, the duty a licensee has towards borrowers and the provision of open-ended loans. Oregon consumer credit laws are designed to protect citizens from unscrupulous lending practices.
Consumer Credit License
A company that offers finance loans to consumers in the state of Oregon must first obtain a license. The firm must pay an annual license fee, and all licenses begin on the first day of the calendar year of their start date and end on the last day of that calendar year. Licenses, once granted, remain in force until they are revoked or allowed to lapse with the non-payment of the annual fee. Applications must be made in writing to the Director of the Department of Consumer and Business Services, using the official form provided by the department. Before issuing a license to provide consumer credit, the department verifies that the applicant has the financial experience, responsibility and character to run the business honestly and fairly. The department may revoke a license if the licensee does not conform to the provisions of chapter 725 of the Oregon Revised Statutes. Section 725.060 of the Revised Statutes forbids false advertising, including the inclusion of false or misleading rates of interest, or terms and conditions of a loan.
Duty of Licensees Towards Borrowers
Persons, partnerships or corporations that offer consumer credit have specific responsibilities towards borrowers as noted in the Oregon Revised Statutes. Section 725.355 prohibits a consumer credit provider from accepting an assignment of a borrower's future earnings as security for a loan. Borrowers are allowed to authorize deductions from their pay in order to pay back a consumer credit loan, but only if the authorization can be revoked by the borrower at any time. According to Section 725.360, consumer credit providers must provide consumers with a statement, in English, at the time a loan is made, detailing the conditions of the loan. These conditions include the name and address of the borrower, and the licensed loan provider, plus the capital amount of the loan, and the date when the loan falls due for repayment or the terms of payment. The statement must also contain the rate of interest charged for the loan and the security offered for the loan, if any.
Open-ended Loans
An open-ended loan is one in which a licensed consumer credit provider advances money to a borrower and advances extra money, at the borrower's request, during the lifetime of the original loan. The new advances are added to the borrower's account with the loan provider, and repayments continue until such time as the borrower has paid off the account to the lender in full. According to Section 725.345 of the Oregon Revised Statutes, open-ended loans of this type are allowed, but the borrower must be given the opportunity to pay off the entire balance of the loan, with one payment, at any time with no penalties incurred.
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