payday loans

The Pay Day Lending industry has been successful in avoiding regulation in Texas at the state level but 22 cities have passed ordinances that try to cap the fees and roll overs for the loans.

A bipartisan effort has come together in Austin this session to try to corral payday and Auto title lenders with House Bill 3047.

At a press conference former House Speaker Tom Craddick expressed his dissatisfaction with the consumer lenders.

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Last week the Obama administration announced that the Department of Defense (DoD) would be increasing protections for service members from predatory loans.

Military members have long been targets for payday and predatory lenders. For this reason Congress passed the Military Lending Act (MLA) in 2006 that capped percentage rates at 36 percent on payday and auto title loans, and didn't allow the loans to be automatically renewed for military service members. 

These protections proved difficult as payday, auto title, and other predatory lenders were changing terms and other aspects of loans to avoid the MLA's clamp down.

According to a recent study for Congress the DoD stated:

However, specific definitions of problematic credit no longer appear to function well in the current marketplace. 

For instance the old language in the act limited the percentage rate on loans under $2000 and loans 91 days or fewer, so many payday lenders restructured offerings to longer than 91 days, or making them "lines of credit," which allowed them to maintain large percentage rates. 

Paul Flahive, Texas Public Radio

Today the city of San Antonio takes two payday lenders to court for violating the ordinance it passed two years ago to regulate the industry " in an effort to reduce against abusive and predatory lending practices."

The ordinance includes limiting the percentage rate of the loan to the income of the lendee, limiting the number of rollovers a person can take and requiring the contract be written in a language the borrower can understand, among other things. 

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There are more payday loan shops than Starbucks in Texas, with 200 right here in San Antonio. 

A new study by the Center for Public Policy Priorities showed that payday lenders in Texas made more last year than ever despite giving out fewer loans.

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The Center for Public Policy Priorities, a left-leaning political think tank, released a study showing that in 2013 the industry raised it’s fees by 12 percent, collecting over $1.3 million from Texans.

Don Baylor, a senior policy Analyst with the center, said that Texans between 2012 and 2013 paid more in fees for loans using a paycheck or car title as collateral.

“So we saw these loans become more frequent and we also saw them become much longer in terms, which means Texans are paying a lot more for these products,” Baylor said.