Texas has been battling Payday loan lenders, at least on the local governmental level. One such city is Dallas who has tackled lenders head on. Dallas has started its own lending venture known as the Community Loan Center of Dallas. The Community Loan Center of Dallas will be allowing employees of companies who enroll in the program to apply for and receive loans up to $1000.00 with no credit check or collateral needed. To reduce the risk of default payments are deducted directly from borrowers paychecks. The move was designed to combat predatory lending in a state where payday loan lender charge upwards of 400 to 500 percent. Not only are they providing loans at low to moderate interest but also financial counseling to help ensure the financial success of those most in need.
The city of Dallas has also enacted strict payday loan lending laws and requirements. Dallas requires that any lenders in the city or doing business in the city register with the state. They also must adhere to strict record keeping requirements as well as mandatory inspections. Lastly a law was enacted to restrict extensions of consumer credit in an effort to prevent perpetual loan roll overs that many payday loan borrowers become trapped into, leading to a never ending cycle of debt to pay off the original loan. When a payday loan is rolled over a new new loan is made with equally high interest but also fees which add on to the already high debt, the borrower often has to take out several loan roll overs to finally pay of the original loan.
The payday loan industry fought back but in May the 5th District Court of Appeals in Dallas affirmed the dismissal of a lawsuit by payday and title lenders against the city’s ordinances targeting the industry. The city ordinances were challenged by the Consumer Service Alliance of Texas, which is Texas premier title and payday lender trade group. CSAT had argued that the laws had been preventing their members from doing proper business as lenders, but the high court found this argument to be without merit.
Other cities and towns through out Texas are combating unethical lenders. Seguin, Tx for example enacted laws against payday lenders. In a city where there are more payday lenders than there are banks it comes as no surprise that the city has made moves to regulate this ever increasingly busy trade. The city ordnance seeks to restrict the dollar amount of such loans, how and when and how often such loans may be rolled over and in the case of title loans how much of a vehicle’s value that can secure with a title loan.
Texas is unique in the fact that statewide there are more title loan companies and payday loan lenders than there are banks. Texas also has law makers who are part of the Industry directly, take for example Gary Elkins a member of the Texas House of Representatives from the Houston area. Note worthy to is the fact that Rep Gary Elkins has been charged with violating San Antonio’s, Houstan’s and Dallas’s ordinance covering payday lenders, although none of the offenses is criminal.
One thing is certain and that is in Texas that Local Governments are tackling head on abusive lending practices and that in 2015 we can expect more local Governments to take on these quality of life issues.