Lawmakers advanced a bill Monday that would cap interest rates at 36 percent per year for all consumer loans less than $50,000 in an effort...

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SALEM, Ore. — Lawmakers advanced a bill Monday that would cap interest rates at 36 percent per year for all consumer loans less than $50,000 in an effort to close loopholes in Oregon state law that supporters say is being exploited by payday-loan shops.

The bill, sponsored by House Speaker Jeff Merkley and eight other legislators, would apply to payday and car-title lenders, allowing them to charge a maximum fee of $10 per $100 of the loan amount or $30, whichever comes first.

“Predatory lenders have tried to find a way to get around the requirements,” said Rep. Suzanne Bonamici, D-Beaverton, a supporter of the bill. “This will make sure that all consumer lenders are within the 36 percent, which I think is very reasonable.”

The Consumer Protection committee approved the bill Monday, and it should be voted on in the House sometime in the next few weeks.

Last year, lawmakers passed similar legislation that goes into effect July 1, but that law applied only to a small segment of consumer lenders and didn’t stop car-title and payday lenders who can charge annual interest rates of 300 to 500 percent interest a year.

“High-cost, payday and car-title lenders are targeting the poor and people who are living paycheck to paycheck,” said Angela Martin, director of Economic Fairness Coalition of Oregon, who supports the bill. “Without a doubt, these lenders have a team of lawyers who have found a way through every conceivable loophole in states across the country.”

Martin said that payday lending is a huge industry. In Oregon, she said, there are more payday-loan businesses than there are McDonald’s restaurants, and about two-thirds of the businesses are owned by large, multistate companies.

Last year, the federal government passed a law capping interest-rate loans for members of the armed forces after the Defense Department reported that one-fifth of active-duty service members use payday lenders.

But payday and car-title lenders say the Oregon bill will put them out of business. Other people say the legislation fails to address more fundamental problems.

“They are not providing an alternative; they are simply trying to wave a magic wand,” said John Charles, president of the Cascade Policy Institute, a conservative think tank in Portland.

“All the people they imagine themselves to be helping now have fewer options. If they have fewer options, how are they better off?”

But most of the lawmakers in the Consumer Protection committee supported the bill; some because of personal experience.

Rep. Donna Nelson said that she wanted to curb high-interest lending because she had “been there, done that.” The Republican from McMinnville said that the bill was critical to helping Oregonians down on their luck.

“Three kids, a destroyed leg, no job, no insurance, no house,” Nelson said. She knew what it’s like to be wiped out by massive debt.