A new law going into effect June 5, House Bill (HB) 4116 (2026), closes a loophole that allowed internet lenders to charge interest rates in excess of Oregon’s limit of 36 percent for consumer finance loans.
Consumer finance loans are unsecured small dollar loans with a term of 60 days or more. Since 2007, consumer finance loans in Oregon have been limited to a 36 percent interest rate. This limit is intended to protect Oregonians from predatory lending practices.
However, in recent years, some lenders have sought to take advantage of a provision in federal law called the Depository Institutions Deregulation and Monetary Control Act of 1980 (DIDMCA) enabling state-chartered banks from other states to export their home state’s interest rate to Oregon.
By partnering with a bank chartered in a state that allows higher interest rates, some lenders have charged Oregonians interest in some cases in excess of 100 percent APR. Since 2020, DFR found evidence of more than 31,000 loans totaling at least $61 million with interest rates that exceed Oregon’s cap.
In a recent enforcement action, DFR was successful in securing a settlement that required a lender to pay restitution of $900,000 for charging interest that exceeded the cap. However, the option to export other states’ interest rates still left Oregon consumers vulnerable to these practices.
DIDMCA allows states to opt out of permitting banks chartered in other states from importing another state’s interest rate. HB 4116, signed into law by Gov. Kotek on April 7, exercises Oregon’s opt-out right under federal law. The law also clarifies the applicability of Oregon law to internet-based lending and makes other technical updates. Now, lenders can no longer take advantage of DIDMCA interest rate exportation to evade Oregon’s interest rate caps.
Oregon consumers should know that if they are charged interest in excess of 36 percent for a consumer finance loan, it is likely in violation of the law. We would strongly encourage any consumers to contact the Oregon Division of Financial Regulation for information, assistance, and, if needed, regulatory action to ensure compliance. Our consumer advocates can be reached at 888-877-4894 (toll-free) or dfr.financialserviceshelp@dcbs.oregon.gov.
Source: Oregon Division of Financial Regulation
