How to Avoid Payday Loans in Dallas

Inside Subprime: Jan 27, 2019

By Lindsay Frankel

There is a growing poverty and homelessness problem in Dallas. The number of Dallas, Texas residents living in poverty has increased 39.1 percent since 2000, even though the population only grew about 7.6 percent. In addition, nearly one third of children in Dallas are living in poverty, making Dallas the third worst major U.S. city for child poverty. Many low-income Dallas residents struggle to make ends meet, and those desperate to put food on the table may turn to payday loans. These short-term, small-dollar loans provide immediate access to cash, even for people with bad credit. But they also come with significant risks. Payday loans in Texas carry an average annual interest rate of 454 percent, and there are few protections in place to keep borrowers from drowning in debt.

What laws protect consumers from payday loans in Dallas?

Dallas was the first city in Texas to pass local ordinances that placed limits on payday lenders in 2011. The city both restricts where payday lenders can open up shop and requires principal reduction for loan renewals. Lenders are prohibited from issuing advances that exceed 20 percent of the borrower’s gross monthly income, and more than three rollovers are not allowed.

What other resources are available in Dallas?

Most people use payday loans to cover everyday expenses, but unexpected costs can exacerbate financial stress. That’s why it’s important to plan ahead and save for emergencies. You should also check to see if you and your family members are eligible for Texas Medicaid, which offers no or low-cost premiums for healthcare coverage, and the state’s Supplemental Nutrition Assistance Program (SNAP), which helps low-income families with purchasing groceries.

If you need healthcare right away, try visiting a local free or sliding-scale health clinic, such as the CitySquare Community Health Center. And if you’re struggling to afford food, visit a local food pantry. You can also dial 2-1-1 to be directed to local nonprofits or state assistance programs that may be able to help low-income families struggling to pay their bills.

What are some alternatives to payday loans in Dallas?

Dallas residents should always consider payday loans a last resort rather than an immediate solution. The average cost to borrow a $300 payday loan in Texas for five months is $701. These expensive loans are risky for those already living paycheck to paycheck.

If you can’t reach out to friends and family for help, consider less costly options for borrowing. Try talking to banks and credit unions about their loan offerings or applying for a credit card. If you have bad credit and can’t access these options, look into taking out an installment loan to help you get back on your feet. The combination of longer terms and lower interest rates makes these loans much less risky than payday loans.

For more information on payday loans, scams, and cash advances and check out our city and state financial guides including Texas, Arlington, Austin, Dallas, El Paso, Fort Worth, Houston. Irving, Killeen, McAllen, Plano, Round Rock, San Antonio, Tyler and Waco.