2013 Lege–Payday & Auto Title Lending

Two years ago, the 2011 Texas Legislature enacted two measures to rein in the Wild West of payday and auto title lending by requiring licensing, standard disclosures, and data collection under the Office of Consumer Credit Commissioner.

The bill to address the cycle of debt—where consumers “roll over” or refinance a single loan multiple times and incur unlimited fees—did not make it to the finish line last session.     As a result, Dallas, Austin, San Antonio, and now El Paso have passed local ordinances since last session to address the cycle of debt and make borrowers more successful in repaying their loans on time.

Based upon the data collected during the first nine months of 2012, most consumers (about 75%) are unable to repay their loans on time and have to refinance.  Additionally, Texans pay arguably the highest cost for a payday loan compared to other states.  Whereas consumers in Oklahoma initially pay $75, consumers in Florida pay $55, consumers in Texas pay $115 for a $500 loan.  Finally, auto title lenders have repossessed over 25,000 vehicles so far this year—a rate of about 92 per day, a much higher figure then many stakeholders anticipated.

Concerned Texans from around the state have formed two large statewide coalitions—Texas Fair Lending Alliance and Texas Faith for Fair Lending—to push for payday and auto title lending reform in the 2013 Legislature and beyond.

Our goals are simple:   fair access to short –term loans that meet reasonable repayment terms;  better credit products that promote successful repayment; and a reduction in payday and auto title loan fees incurred by the consumer.  With positive payday and auto title lending reform, we can decrease asset stripping and increase financial stability for working Texans.

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