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Recently, along a commercial strip in Tigard, I found Lucas, 34, looking for a low-priced dining room set for his family’s Beaverton apartment.


A landscaper, he was familiar with days of quiet struggle that melted into each other. Low on cash, he was hoping to find a good deal at a lease-to-own store.

At lease-to-own stores, customers lease an item for a monthly cost. At the end of a specified period, the customer owns the item.

In Lucas’ case, he found a wood dining table with six chairs for payments of $109.98 a month for 12 months. Total cost with added leasing charges: $1,319.76. The problem is, he could have bought the same dining room set at another store for $510.30.

But he didn’t buy at the other store because he didn’t have the cash or a credit card.

Just as state lotteries are effectively an added tax on the poor, financial transactions in general are more costly for them as well.

Some low-income people in Lucas’ situation make things worse by turning to payday lenders. These typically lend small amounts of money with an agreement that the loan will be repaid when the borrower receives their next paycheck.

The problem is the interest rates and fees for payday loans are usually punishing and borrowers frequently roll over their loans, generating even more costs. Gardner

Oregon laws cap payday loan interest rates at 36 percent, but lenders skirt the laws with illegal online lending operations. Some online lenders also get around Oregon law by locating on tribal reservations, which are exempt from state regulations.

Low-income people also try to save money by buying at stores offering zero percent interest on purchases for an extended period. For example, a Portland area mattress chain is offering zero percent interest for up to 36 months on purchases over $3,000.

But there’s a catch with such appealing offers. In many cases, if the full charge isn’t paid off within the zero interest time period, a buyer is charged interest on the full loan at a high rate retroactively. At the mattress chain, that rate is 29.99 percent. This means that failure to pay off a $3,000 loan in 36 months will result in interest charges of $1,584.24.

Low-income people also get in over their heads by borrowing at high interest rates against their anticipated end-of-year Earned Income Tax Credit from the federal government. In 2014, almost 2 million people applied for “refund anticipation checks."

But there are alternatives that can save low-income borrowers with poor or no credit history a lot of money.

Some banks, credit unions and churches offer small, short-term cash advances as an alternative to a payday loan. Portland-based Metropolitan Family Services’ Ways to Work program helps low- and moderate-income individuals buy, refinance or repair cars with loans at reasonable rates.

There are also some online lenders that offer less-expensive loans, such as endUp and Activehours, which pays hourly wage earners the same day they work and asks that borrowers repay the loan along with what they feel is fair in fees.

Then there are peer-to-peer lending websites. At Prosper, borrowers choose a loan amount and purpose and post a loan listing. Investors review the loan listings and invest in listings that meet their criteria. Borrowers make fixed monthly payments and investors receive a portion of those payments directly to their Prosper account.

To help low-income people make smarter financial decisions overall, there are also a variety of organizations that offer financial literacy training.

Community Action offers free evening classes in Washington County that give families information and skills to make sound decisions about savings, debt, budgeting and more. Metropolitan Family Service hosts a financial coach in partnership with the federal Consumer Financial Protection Bureau. The agency also offers free financial literacy consultations and workshops designed to help families develop knowledge around budgeting, saving, debt management and credit information.

Navigating the financial landscape can be hard for low-income Oregonians, but taking smart steps forward can set the stage for a more secure future.

— Scott Gardner is an accounting manager at Portland General Electric. He lives in Hillsboro.

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