The history of payday lending in Texas is not really long - in the 90s these practices were prohibited in the state as well as car title businesses. However, in 2001 the companies eventually got their way and the state Legislature adopted a certain form of payday loan regulation. In fact, these regulations have never been strict, yet the companies all the more were able not to comply with the interest rate caps and fee ordinances.
As a result, there are numerous payday lending businesses in the state of Texas. As of the 2004 statistics, there were 1,300 storefront lenders in Texas. The number grew up to 3,500 in 2010. Now, when a decade passed, they are much more of them - they are actually easier to find sometimes than fast food places.
Texas refers to the states with permissive legislature with regards to payday loans. Which means now that the state has no strict limits with regards to either maximum loan amount or to the rate of interest that a lender can charge. However, payday lender companies also find a good way to avoid the Texas Constitution’s 10% usury cap. They tend to register with as Credit Access Businesses (CAB) under the Credit Services Organizations Act. This actually makes them authorized to charge higher fees and in accordance with the official statistics for the year 2011 the number of businesses that registered as CSO reached 3,400.
Surely, payday lending has always been a controversial issue in the state and there have always been different opinions on the account of their use and positive effect on the citizens of the state. In this respect the survey of 2010 can be recalled. It was conducted by Catholic Charities with the conclusions that as much as 20% of their financial assistance goes to households that are in a habit of using payday loans, or similar short-term products. This news gave a rise to a lot of speculations and the debate whether the state actually needs taking more stringent measures with regards to payday lenders and their practices in the state.
As a result, the Texas legislative session 2011 brought some changes. With the efforts of Texas Faith for Fair Lending and the Texas Fair Lending Alliance two bills passed that aimed to reform the industry of payday lending in Texas. They did bring alternations into the industry; however, the issue of fees was not addressed. Still, they established compulsory licensing of payday lenders who want to operate under the CSO Act as well as compulsory disclosure of all the loan costs in details.
Since 2011 many Texas cities have decided to go further with payday loan regulations. As of today, many cities in Texas passed zoning ordinances in order to limit the options of payday lender stores to locate in certain areas; some cities have gone also into the issues of capping the rates and loan amounts.
As of today, it looks like the permissiveness of the state payday loan regulation is obtaining more and more restrictive traits. It looks like that in the nearest future Texas will take more restrictive measures with regards to payday lending. With the Consumer Financial Protection Bureau in charge of the short-term lending situation in the country, Texas shows all the signs of following the lead.
At FEDPAYDAY.com we represent a mediator company that does not offer payday loans or short-term unsecured loan products of any kind in the state of Texas directly. However, we have a very broad database of Texas-based payday lenders who we easily can match you up with. Taking into account your needs and requirements we provide assistance in finding you the most beneficial offer. All our partners are licensed and work in accordance with the Texas state laws.