San Antonio Payday Loans: What You Need to Know

Inside Subprime: Jan 22, 2019

By Lindsay Frankel

Even as local and national poverty rates trend downward, San Antonio’s poverty rate is the second highest of the largest U.S. metro areas, according to data from the U.S. Census Bureau. When low-income San Antonio residents struggle to make ends meet, those with bad credit may be tempted to turn to payday loans. These small-dollar, short-term loans are fast and easy to obtain without a credit check. But payday loans quickly become a long-term debt problem for borrowers. In the state of Texas, which places very few restrictions on payday lenders, the average interest rate on a payday loan is 454 percent. Because these loans cause undue financial harm to low-income families, they should be avoided at all costs.

What laws protect borrowers from payday loans in San Antonio?

A local ordinance was passed in 2013 that carries some protections for borrowers in San Antonio. Among the restrictions, payday loans are limited to 20 percent of the borrower’s gross monthly income, and no more than three rollovers or renewals are allowed. Each installment needs to reduce the loan principal at least 25 percent. Lenders are also required to provide information in a language that the borrower can understand and to provide alternative resources such as local non-profit financial education agencies.

What other resources are available in San Antonio?

Payday loans are typically used for everyday expenses, but preparing for emergencies is a responsible way to defray costs. If you are uninsured, check your eligibility for Texas Medicaid. Your children may also be eligible for CHIP. If you need help buying groceries, try applying for the state’s Supplemental Nutrition Assistance Program (SNAP). Low-income families may also be eligible for assistance with finding affordable housing or paying rent and utility bills.

Sometimes, emergencies can catch us unprepared. If you need healthcare right away, research local free and sliding scale health clinics in San Antonio. Some options include Haven for Hope and CommuniCare Health Centers. If you’re struggling to put food on the table, check out this list of San Antonio food pantries and find one near you.

What are some alternatives to payday loans in San Antonio?

If you find yourself strapped for cash and you can’t turn to family and friends for help, you may need to borrow some money until you can secure an additional source of income. Still, payday loans are not the only solution. Credit cards and personal loans have much lower interest rates, and you should always check with local banks and credit unions before taking out a payday loan. River City Federal Credit Union offers a Payday Alternative Loan which doesn’t require a credit check, but there is a membership requirement.

You could also consider taking out a lower-cost installment loan, which will provide you with quick access to cash, but with lower interest rates and longer terms. These loans are easier to manage for most people, and while they don’t require a credit check, you’ll see your credit score improve if you make payments on time. Once you have the money you need, prepare for future expenses with a budget and savings plan.  

For more information on payday loans, scams, and cash advances and check out our city and state financial guides including TexasArlington, AustinDallasEl PasoFort WorthHoustonIrvingKilleen, McAllenPlanoRound Rock , San AntonioTyler, and Waco.

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