Laws in TX seeks to restrict pay day lending

You will find over 3,500 payday lenders within the state of Texas. The TX legislature is thinking about limiting this short-term credit business. 2 pieces of complimentary legislation have been introduced towards this end. Both of these bills seek to redefine “Credit Service Organization” to exclude cash advance stores.

The exemption you get as a Credit Service Organization

Right now, you will find lots of limits in TX. Financial institutions and consumer credit are both limited because of this. Currently cash advance stores have to be put under an umbrella phrase. “Credit Service Organization” is what this phrase is. Payday loan stores give out short-term credit. Usually those with bad credit or who do not have credit will come to these stores. This particular exemption doesn’t make a differentiation between check-cashing services — which provide services to those without banks — and payday advances — which provide services to those who don’t have access to the credit they need.

Impact of TX payday loan legislation

The 2 bills that have been introduced within the TX legislature re-define “Credit Service Organization” to specifically exclude cash advance stores. This would limit the fees that these stores can charge based on an annual percentage rate. Industry estimates are that someplace between 3,000 and 6,000 of the 7,800 employees at payday loan stores in TX would lose their jobs. It would also reduce the amount of available credit to consumers who use payday advance stores.

Willing to recognize some kinds of regulation

TX SB 253 and HB 410 are what Texas payday loan stores and lenders can’t support. However, they said legislation and oversight beyond this is welcomed. The credit offered by payday advance stores is something that credit cards, credit unions and banks cannot offer making the short term credit accessible very distinct. A useful and needed service is provided by the payday loan industry. The concern is mostly over interest rates from lawmakers. The interest is less than a credit card cash advance would end up leaving you with though.

Citations

Texas State

legis.state.tx.us/tlodocs/82R/billtext/pdf/SB00253I.pdf#navpanes=0

Texas HB

www.legis.state.tx.us/tlodocs/82R/billtext/pdf/HB00410I.pdf#navpanes=0

KXAN

kxan.com/dpp/news/politics/state-looks-to-curb-payday-loans

Personal Money Store

personalmoneystore.com/payday-lending-statistics/