Payday Loans

Texas Payday Loan Laws

Texas is one of those states that have taken strict against unscrupulous payday lenders. Though payday lending is legal as per Texas payday loan laws, many legal provisions have been designed specifically to protect the rights and interests of consumers. Texas Office of Consumer Credit Commissioner is the regulatory authority in this state that looks after the matters relating to short-term cash advances. You can contact them for more detailed information regarding the laws applicable to payday loans in your state. They are also the main authority to contact when you have to file a complaint against those lenders who are not abiding by the laws or are harassing the borrowers. The Texas Office of Consumer Credit Commissioner is located at 2601 N. Lamar Blvd. Austin TX 78705, their fax number is 512-936-7610, and their phone number is 512-936-7600.

Rollovers Are Not Permitted

As per Texas payday loan laws, if borrowers fail to repay the loan within the set due date, lenders cannot rollover or renew or refinance or consolidate the loan balances. Any such attempt on part of the lender will be considered as illegal and borrowers have the right to file complaints against the same with the state authority. Renewals or extension of the due date as part of an affordable repayment plan may be allowed if lenders do not charge interest for the extended period of time. However, there is a loophole: the laws allow lenders to charge various fees and there are no maximum limits specified for the same. Unscrupulous payday loan companies can use this loophole to their advantage and charge borrowers a high amount of money in the form of various finance charges.

Criminal Lawsuits Possible

Texas payday loan laws do not say specifically whether criminal lawsuits can be filed against borrowers in case they are unable to pay off the loan within the set repayment period. This way, the state laws have actually left a wide room for unscrupulous lenders to harass consumers by threatening them with jail imprisonment. It is not illegal for them to file criminal lawsuits against you if you do not make the repayment in time. What is worse, the laws do not specify any maximum limit on the collection fees.

Annual Percentage Rate (APR)

The APR on a $100 of payday loan issued for a period of fourteen days can be as high as 390% per annum. As per Texas payday loan laws, lenders can charge interest in this format – at the rate of 48% per annum on the total loan amount issued plus an addition $10 on every $100 of loan issued for a 14-day period. In addition to that, up to $12 can also be charged as additional finance charges on every 14-day $100 loan.

Maximum Amount And Number Of Loans

Though the laws do not say anything specifically on how many outstanding loans a borrower can have in his/her name at one time, the aggregate total of all the loan accounts must not exceed $500 in any case. If a lender is issuing a cash advance while you have already reached your quota of $500 of outstanding loans, it will be considered as a fault on part of the lender. Those lenders cannot force you to make the repayment (though you will still have the obligation to pay at least the principal loan on such accounts without any interest or other charges).

Texas payday loan laws also specify that lenders must allow borrowers a repayment period of at least seven days but not more than thirty-one days. However, the laws do not make it mandatory for the lenders to offer an affordable repayment plan to those borrowers who are otherwise facing difficulty in paying off the dues on short-term cash advances.

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Posted in Payday Loan Laws, Payday Loans | 1 Comment »

One Response to “Texas Payday Loan Laws”

  1. Macc says:

    Very well. State of Texas is a state that can be mentioned as a safe place to live if you want to take pay day loan. Texas is a part of such states that have taken a though about the demerits of pay day loan. It is now compulsory for a person to follow some specific rules which are beneficial fro both the creditors as well as borrowers. The biggest problem with the pay day loan is that these loans can be rolled over but in Texas Roll-overs are completely banned. If a person is not able to repay the loan with in specified time limit, the loan amount will not be renewed. But creditors can offer a repayment plan without any interest for the expected period of time. Criminal case can be filed against the defaulter borrower. This should not be permitted, the creditor can take extra advantage of this option, and they can use this tool to do the harassment of the borrowers. The annual percentage rate can also be extended to very high level which will again prove to be against the borrowers. The lenders are authorized to charge as 39% per annum which is very high.

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