Sign Up

Raise Texas

Policy

High Cost of Small Dollar Lending in Texas

Explanations of payday and auto title loans

  • A payday loan is a small cash advance—usually ranging from $100 to $1,000—due in full plus interest and fees, in two weeks, with a post-dated check or electronic access to a debit account as collateral.
  • An auto title loan is similar except that a car title is used as collateral. These loans are due in full, plus interest and fees, at the end of a short term, typically one-month. If the borrower cannot pay the full amount at the end of a month, the loan company can take the car.

Reason that Texas payday and auto title lenders can charge the unprecedented fees

  • In 2001, the Texas Legislature passed a law that effectively capped interest rates and fees for payday loans. To avoid complying with state lending laws, payday and auto title lenders have exploited a loophole, where they claim to be “Credit Services Organizations” (CSOs). Instead of making loans, they get around the law by charging excessive fees to broker and guarantee loans.  Based on 2011 legislation, a Credit Services Organization (CSO) is now called "Credit Access Business" (CAB).  For more information about the 2011 legislation click here.
  • Payday and auto title lenders in Texas often charge upwards of 500% APR for an average $300 loan. This translates to a payday borrower in Texas will pay $840 for a $300 loan.
  • Average payday borrowers get back-to-back loans many times before they are able to pay the loan in full and end up paying many times the original loan amount. In fact, more than 75% of payday loans are taken out within 2 weeks of the previous loan in order to fill the financial gap caused by the loan itself. This is how the loans catch a borrower in a cycle of debt.
  • Concentrations of payday/auto title locations stunt property value appreciation and give neighborhoods a look of economic decline.

Solutions

  • Alternative short-term financial products
  • Meaningful market regulation
  • Financial literacy

RAISE Texas is committed to supporting legislation that will close the CSO loophole and will hold all payday and auto title lenders accountable for their rates and fees. In order to have success in the legislature, it is going to take the entire RAISE Texas network and more to discuss this problem with elected officials on all levels. Stay informed of the policy agenda to stop the high cost of lending in Texas by visiting this page frequently, or by signing up to be a part of the Alternative Small Dollar Consumer Loans Products and Policies Campaign.

Bills Introduced During the 84th Legislative Session:

HB 2808 Rep. White Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.

Considered in a public hearing in the Investments & Financial Services Committee April 29, 2015, and was left pending in committee.

HB 3047 Rep. Craddick Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.

Considered in the Investments & Financial Services Committee on April 29, 2015, and was left pending in committee.

SB 121 Sen. West Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; providing civil and administrative penalties.

Passed favorably as substituted from the Business & Commerce Committee on May12, 2015.

HB 1020 Rep. Giddings Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; providing civil and administrative penalties.

Considered in a public hearing in the Investments & Financial Services Committee April 29, 2015, and was left pending in committee.

SB 91 Sen. Ellis
Relating to a restriction on charges charged for certain extensions of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining.

Referred to Business and Commerce Committee on January 26, 2015.

SB 92 Sen. Ellis
Relating to regulation of certain credit services organizations and to certain extensions of consumer credit the organizations obtain for a consumer or assist a consumer in obtaining.

Considered in a public hearing in the Business & Commerce Committee on April 28, 2015, and was left pending in committee.

SB 1323 Sen. Menendez
Relating to fees paid to certain credit services organizations in connection with certain extensions of consumer credit.

Considered in a public hearing in the Business & Commerce Committee on April 28, 2015, and was left pending in committee.

HB 3811 Rep. Thompson 
Relating to extensions of consumer credit in the form of a deferred presentment transaction that a credit access business obtains for a consumer or assists a consumer in obtaining; providing a civil penalty; adding a provision subject to a criminal penalty.

Considered in a public hearing in the Investments & Financial Services Committee April 29, 2015, and was left pending in committee.

HB 3812 Rep. Thompson 
Relating to extensions of consumer credit in the form of a motor vehicle title loan that a credit access business obtains for a consumer or assists a consumer in obtaining; providing a civil penalty.

Considered in a public hearing in the Investments & Financial Services Committee April 29, 2015, and was left pending in committee.

HB 371 Rep. McClendon
Relating to certain extensions of consumer credit facilitated by a credit access business for certain military personnel or their dependents.

Considered in a public hearing in the Investments & Financial Services Committee April 22, 2015, and was left pending in committee.

HB 2166 Rep. Flynn
Relating to certain extensions of consumer credit facilitated by credit access businesses; providing a civil penalty.

Considered in a public hearing in the Investments & Financial Services Committee April 22, 2015, and was left pending in committee. 

HB 3824 Rep. Capriglione
Relating to the regulation of certain short-term consumer loans; imposing an assessment and fees; adding provisions subject to criminal penalty; requiring an occupational license.

Considered in a public hearing in the Investments & Financial Services Committee April 22, 2015, and was left pending in committee. 

SB 1282 Sen. Eltife
Relating to the regulation of consumer credit transactions and the regulatory authority of the Office of Consumer Credit Commissioner.

Passed the Senate on April 23, 2015, and passed favorably as substituted from the House Investments & Financial Services Committee on May 5, 2015.  The bill was returned to Local & Consent Calendars Committee on May 27, 2015. 

HB 3094 Rep. Parker
Relating to the regulation of consumer credit transactions and the regulatory authority of the Office of Consumer Credit Commissioner.

Passed favorably as substituted out of the Investment & Financial Services Committee, and was placed on the General State Calendar for May 8, 2015. 

SB 1650 Sen. Eltife
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations.

Passed the Senate on May 11, 2015, and is scheduled for a public hearing in the House Investments & Financial Services on May 20, 2015. 

HB 411 Rep. Turner
Relating to prohibiting telemarketing calls by a credit access business.

Passed the House on May 6, 2015, and referred to the Senate Business & Commerce Committee. 

HB 2239 Rep. Turner
Relating to prohibiting certain unsolicited mail by credit access businesses; providing a civil penalty.

Referred to Business and Industry Committee on March 16, 2015.

HB 2273 Rep. Turner
Relating to a contract or other agreement between certain governmental entities and a credit services organization or credit access business.

Considered in a public hearing in the General Investigating & Ethics Committee on April 9, 2015, and left pending in committee.

HB 3599 Rep. Turner
Relating to the sale of collateral in connection with certain extensions of consumer credit that a credit access business obtains for a consumer or assists a consumer in obtaining; providing a civil penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 29, 2015, and was left pending in committee.

HB 3638 Rep. Turner
Relating to reports for credit access businesses required by the consumer credit commissioner; amending provisions subject to criminal penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 29, 2015, and was left pending in committee. 

HB 3638 Rep. Turner
Relating to reports for credit access businesses required by the consumer credit commissioner; amending provisions subject to criminal penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 29, 2015, and was left pending in committee.

HB 4057 Rep. Bernal
Relating to contracts and other documents issued by credit access businesses; adding a provision subject to criminal penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 22, 2015, and was left pending in committee. 

SB 1486 Sen. Garcia
Relating to the presumption of intent in the prosecution of certain criminal cases involving theft by check or issuance of a bad check.

Referred to Criminal Justice Committee on March 19, 2015.

HB 2803 Rep. Peña
Relating to notice requirements for licensed lenders of deferred presentment transactions and motor vehicle certificate of title loans; adding a provision subject to a criminal penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 29, 2015, and was left pending in committee. 

HB 3223 Rep. Romero, Jr.
Relating to requiring a credit access business to verify the vehicle identification number used to obtain a motor vehicle title loan; adding a provision subject to criminal penalty.

Considered in a public hearing in the Investments and Financial Services Committee on April 22, 2015, and was left pending in committee. 

HB 610 Rep. Davis
Relating to the statute of limitations for an action on a credit card account.

Referred to Judiciary and Civil Jurisprudence with public hearing and no action taken in committee on March 3, 2015.

HB 3873 Rep. Capriglione
Relating to the Office of Consumer Credit Commissioner, the consumer credit commissioner, and the duties of the consumer credit commissioner, including the regulation of credit access businesses.

Considered in a public hearing in the Investments and Financial Services Committee on April 22, 2015, and was left pending in committee.

HB 3938 Rep. Longoria
Relating to single premium term life insurance offered in connection with certain consumer loans.

Passed the House on May 12, 2015, and passed favorable as substituted from the Senate Business & Commerce Committee on May 22, 2015. Placed on Intent Calendar on May 27, 2015.

HB 4073 Rep. Eddie Rodriguez
Relating to the acceptance of certain documentation from consumers by certain credit services organizations and the reporting requirements for those organizations; adding a provision subject to a criminal penalty.

Scheduled for a public hearing in the Investments & Financial Services Committee on April 22, 2015.


Copyright © 2016 Raise Texas® | 1811 West 38th Street Austin, TX 78731 | Privacy Policy | Contact Us


Powered by ARCOS | Design by Plus Three