The information below covers regulations for payday loans in Texas. It’s provided for general information purposes only. This information should not be intended in any way as a legal reference. Texas Payday Lenders is not able to give any type of legal advice or recommendations when it comes to payday or installment loans. Contact the appropriate Texas Government agencies if you have questions about payday advance laws. A good place to start when it comes to specific research would be the Texas Financial Regulation Division. Also, most large cities like Dallas, Houston, and San Antonio have citywide ordinances in place that cover cash advances and payday loans.
Texas Payday Loan Laws and Rules
Texas has gone easy on the payday loan industry over the past few years. Most states have strict regulations that govern interest rates, length of the loan, and extensions. In contrast, Texas has taken a hands-off approach. As it stands now, the maximum time a payday loan can last is 6 months or one month for each multiple of $20 over $100. Additionally, no payday lender can charge a start-up cost of no more than one-tenth of the amount borrowed. It should be noted that a start-up cost can not be deemed as being subject to interest charges. Some cities like Dallas and Houston have their own mandates that regulate Texas payday loans and other types of short-term loans.
There were attempts to regulate the Texas payday lending industry a few years back. At that time the State Legislature attempted to pass laws that would cap interest rates and limit the times a lender could roll over a loan. These regulations didn’t make it very far. With that, many consumer advocates hope these regulations are updated and passed some time in the future, but at this point, it’s tough to tell. Many local cities have new ordinances they’re hoping to roll-out soon as well. Texas has always had a pro-business mindset and it seems that will continue for the time being. As an example, there are a handful of new companies looking to provide Texas payday loans to borrowers each and every day.
It may be prudent for Texas to adopt some type of interest rate cap for online payday loans. With these changes, they can better protect their consumers who are at risk of a payday loan default or lender lawsuit. We’re already seeing some changes in Dallas as there are rules proposed that would cap the number of loans anyone can have at one specific time. There’s no need to eliminate payday or installment loans like some states have already done. These types of short-term loans have a need in society but only if issued to the right person under the correct circumstances. Another thing to consider is the fact that many companies aren’t really direct lenders. That doesn’t mean they don’t provide short-term and installment loans. But it’s important to know the difference when it comes to actual payday companies and non-direct lenders.
Online Payday Loan Lending Laws In TX
Our recommendation is to use online loans as a last resort. Many large metropolitan areas like Dallas and Austin have many options when it comes to getting a payday loan. Dallas alone has dozens of payday loan lenders within the downtown area! There are plenty of options you’ll want to explore before taking out a payday loan. For example, you can borrow money from a friend, have a garage sale, or try to get a loan from your bank or employer.
As mentioned above, these types of short term loans have high-interest rates. Also, some predatory lenders will attempt to roll over a loan without you knowing. This means that even if you want to pay off a loan in 1-2 weeks they will only withdraw the finance charge. You’ll be stuck in an endless cycle of paying cash advances and installment loans if you don’t know what’s going on. If you take out a payday advance for a financial emergency with the intention of paying it back in weeks as opposed to months then you’ll be fine.
Problems arise when consumers take out a loan for something they want, not something they need. As mentioned above, please consult with your city ordinances if you live in a large city and need more info. For example, if you’re looking for information on actual payday loans. The short term financing options discussed on this site are bound to be around in some for foreseeable future. While we don’t know what type of future regulations will come into play, we do know the rules about online loans in Texas will change. Expect further lending changes as the Texas Legislature has various bills and amendments pending. We urge you to check with your state regulators and your specific city to find out the latest changes that affect payday loans in Texas.