A Guide to Payday and Title Loans in

Texas

The Texas Subprime Marketplace: Texas Title and Payday Loans

At a Glance
Texas, USA
  • Nickname: The Lone Star State
  • Population: 28.2 Million
  • Capital: Austin
  • Website: texas.gov
Download Fact Sheet

If you remember the song that goes “the stars and stripes are big and bright, deep in the heart of Texas!” you already know that Texas is one proud state. While many states continue to struggle decreasing their rates of poverty, the Lone Star State has seen marked improvements since 2008.1 In fact, the Texas poverty rate fell from 17.2 percent in 2014 to 15.9 percent in 2015.On top of a falling poverty rate, Texas has—as of May, 2017—successfully lowered their unemployment rate to 4.8 percent, which is just below the national unemployment rate of 4.9 percent.2

Unfortunately, though, many Texans are still struggling with debt and making ends meet. The 2015 Texas median household income was $56,473, and the average student loan debt—according to the Student Debt and the Class of 2015 report—per person was $27,324.Adding loan payments on top of the essentials can be a burden on many residents.

As a result, Texans might turn to the high interest rates and “fast cash” of payday loans and title loans. If you are looking for ways to make ends meet, don’t fall for a destructive payday or title loan in Texas.

Texas and the United States
Texas
United States
$1,664
$56,375
Debt Per Capita
$56,473
$56,516
Median Household Income

Payday Loans in Texas

When it comes to payday loan regulation, The Center for Public Policy Priorities has labeled Texas a “do-nothing” state.5 Limited payday loan regulation has allowed predatory lending to flourish in the state. In fact, Texas has significantly more payday loan storefronts (1,675) than McDonald’s restaurants (834)! That staggering figure comes out to approximately eight payday lenders per 100,000 people.In 2012, a total of 2,238,938 new loans were taken out with 3,622,957 loans renewed or refinanced.7

The History of Payday Loans in Texas

In 2012, the Texas legislature required storefront payday lenders to report quarterly and annually on loan volume, amounts, fees, refinances, auto repossessions, and any other related information.9 However, there remains no regulation on fees, interest rates or loan amounts—leaving residents unprotected from the most damaging effects of payday loans.9

Quick Fact

On average, a loan of $100 given for a period of two weeks, can lead to an annual interest rate ranging from 250 percent to 800 percent APR because Texas has set no limit for lenders.9

A $500 storefront Texas payday loan would cost you...
$100 in Texas
$87.50 in Alabama
$75 in Nebraska
$55 in Florida
...even if the loan was provided by the same national company in each state!

To avoid any law regulating payday lenders in Texas, companies partnered with banks—federal government regulations allows banks to legally offer loans exceeding state interest caps.9 Like Ohio, Texas payday lenders began referring to themselves as credit repair organizations.9 Under Texas law, credit repair organizations can charge steep fees, allowing the payday loan industry to successfully fight off any efforts to cap their rates in 2013.9

The irony is these groups are supposed to be helping consumers rather than just taking their money—the only requirement is a $100 license fee and the payday lenders in Texas can charge any interest rate they choose.9 To make matters worse, payday loan businesses in Texas more than doubled from 2006-2010.9 Payday loan businesses went from 1,279 registered sites to more than 3,500.9

We took out a loan for $800 in principle. We were supposed to pay back $965 in two weeks, but in order to do that we’d have to not pay some other bill. It took a whole year to pay back the loan. We ended up paying about $2,000.

- Crystal Delacruz

Texas Payday Loan Rules and Regulations

The schedule of fees must be posted at every payday loan office in Texas with an agreement in written form.12 The agreement must contain the loan sum, lender’s name, the dates, and fees itemization.12 While the lender is required to share this information, they are not regulated in how much they can charge, which is where residents get trapped in an endless cycle of debt.12

Texas Payday Regulations
  • Maximum Loan Amount:None Specified
  • Minimum Length of Loan:10 days
  • Loan Term:Up to 180 days for a Credit Access Business (CAB) agreement
  • Fees and Finance Charges:No cap on Credit Access Businesses. Lender interest capped at 10%.
  • Finance Charge on a 14-day $100 Loan:No cap.
  • APR on a 14-day $100 Loan:There is no cap, but state regulator reports an average cost of 410%
  • Maximum Number of Outstanding Loans at a Time:None
  • Criminal Action:Prohibited unless fraud or forgery.
  • Collection Fees:Late fee of 5% of payment or $7.50, whichever is higher.

Final Notes on Payday Loans in Texas

When it comes to payday loans in Texas, it’s almost like being in the Wild West—there’s nothing to regulate lenders. Individual cities continue to work toward protecting their residents, but payday lenders in Texas continue to take short cuts and find loopholes that allow them to charge unrealistic rates.

Title Loans in Texas

Payday loans in Texas are a problem. But what about title loans? Unfortunately, Texas title loans are just as predatory and just as unregulated.

If you don’t know how a title loan works, it is best to steer clear. As of 2013, there were 1,776 title loan companies in Texas, which means there are 10,293 people per title lender.12 According to the Center for Responsible Lending, the average title loan principal value in Texas is $1,04213 and, as of 2013, 475,681 title loans were issued in the state.15

Quick Fact

Texas title loan fees totaled $432 million, joining Alabama, Mississippi, Ohio, California and Illinois for the top six states for short-term loan fee volume.14

Total Annual Texas Title Loan Fees vs Total Annual Texas Payday Loan Fees
Title Loan Fees
Payday Loan Fees
$432 million
$1.2 billion
Texas
$357 million
$230 million
Alabama
$297 million
$184 million
Mississippi
$318 million
$508 million
Ohio
$239 million
$270 million
California

The History of Title Loans in Texas

Since 2001, Texas title lenders have avoided rate caps by registering as Credit Services Organizations (CSOs).17

Texas Title Loan Restrictions

Currently, there is no limit to the maximum amount a person can borrow from a Texas title lender. Regulations created a 10% interest cap, but did not limit the fees a title lender can charge a Texas consumer. However, the term of a title loan cannot exceed 180 days.17 With limited regulations, total Texas title loan fees—as of 2017—have reached $432,068,934.20

By the Numbers
Texas Title Loan Fees
432
Million
Texas Payday Loan Fees
1.2
Billion

Final Notes on Title Loans in Texas

Faith leaders, social service organizations and consumers continue to plead with the Texas Legislature about title loans, but they have failed in closing the loophole or capping fees. While Texas Legislature hasn’t capped fees, or closed the loophole, they have improved reporting requirements. Reporting might have improved, but interest rates need to be capped to better protect consumers from further harm.

Regulating Payday and Title Lenders in Texas

When you’re strapped for cash during difficult times, it can be hard to pull yourself out of the hole you’ve created (it happens to a lot of people). So, you’re short on rent or you had an emergency where you needed more money than normal, what do you do?

Many people might turn to payday loans or title loans in Texas because they’re “easy cash”, or you can find a store all over the state. While this is true, title loans and payday loans in Texas are the farthest thing from a good option for improving your finances during hard times. But, if you’ve already taken out a payday or title loan in Texas, you do still have options. Don’t put up with predatory lenders—speak up and reach out.

How to Report a Predatory Lender in Texas

Texas payday and title lending is a $4 billion a year industry with 3,500 businesses, and no limit on fees or loan sizes.19 This makes the industry difficult for consumers, but a great option for lenders. As many say, “everything is bigger in Texas,” and that means loans, too.22 Texans take out larger loans and pay higher fees than consumers in the nation.22

For further guidance in Texas with payday loans and title loans, consumers can contact the Texas Office of Consumer Credit Commissioner by calling their hotline at (512) 936-7630 or by emailing consumer.complaints@occc.texas.gov. It is important not to let scammers or predatory lenders take advantage of you—reach out and get help.

The Texas Office of Consumer Credit Commissioner information:

Outside Help for Payday and Title Loans in Texas

Aside from the Texas Office of Consumer Credit Commissioner, you can find help and guidance with Texas Appleseed. As part of the Texas Fair Lending Alliance, Texas Appleseed works on projects relating to the Payday & Auto Title Lending Reform. Texas Appleseed believes everyone deserves fair, equitable interest and fee charges for payday, auto title and other small dollar loans, and continues to work together to regulate predatory lending in Texas.

Consumer Protection in Texas

While Texas has not taken steps toward protecting consumers from predatory lending, some cities have. Between 2011 and 2015, 22 Texas cities passed local ordinances that limited payday and auto title lending: Amarillo, Austin, Balcones Heights, Baytown, Bellaire, Brownsville, Bryan, College Station, Dallas, Denton, Dickinson, El Paso, Flower Mound, Galveston, Garland, Houston, Midland, San Antonio, Somerset, South Houston, Universal City, and West University.20 This is a step in the right direction for Texas for payday loan and title loan regulation.

Before turning to payday or title loans in Texas, explore this page and use it as a go-to resource for all the information you need.

Guides to Payday and Title Loans in Texas Cities

You know payday and title loans in Texas are a problem. But what about at the city level?

Check out these payday and title loan guides for the following cities in Texas…

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  1. “Rising Wages Lift Texas Poor, But Almost 1 in 4 Kids Still in Poverty” The Texas Tribune, Accessed  March 20, 2017. https://www.texastribune.org/2016/09/15/there-are-fewer-poor-texans-almost-1-4-children-st/
  2. “Economy at a Glance: Texas” Bureau of Labor Statistics. Accessed March 20, 2017. https://www.bls.gov/eag/eag.tx.htm
  3. “State by State Data” The Institute for College Access & Success. Accessed March 6, 2017. http://ticas.org/posd/map-state-data#
  4. “State Debt” Ballotpedia. Accessed February 13, 2017. https://ballotpedia.org/State_debt
  5. “Houston Could Become Fifth Major Texas City to Crack Down on Payday Loans” Texas Observer. Accessed March 22, 2017. https://www.texasobserver.org/houston-become-fifth-major-texas-city-crack-payday-loans/
  6. “McDonald’s vs. Payday Lenders” California State University Northridge. Accessed March 6, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
  7. “The State of Payday and Auto Title Lending in Texas” Center for Public Policy Priorities. Accessed March 20, 2017. http://forabettertexas.org/images/EO_2013_09_StateofPayday_final_FINAL.pdf
  8. “Payday Lending in America: Who Borrows, Where They Borrow, and Why” The PEW Charitable Trusts. Accessed March 22, 2017. http://www.pewtrusts.org/~/media/legacy/%20uploadedfiles/pcs_assets/2012/pewpaydaylendingreportpdf.pdf
  9. “Payday Loan Consumer Information” CFA. Accessed February 13, 2017. http://www.paydayloaninfo.org/state-information/8
  10. “Texas Administrative Code” Texas Secretary of State. Accessed March 6, 2017. https://texreg.sos.state.tx.us/public/readtac$ext.TacPage?sl=R&app=9&p_dir=&p_rloc=&p_tloc=&p_ploc=&pg=1&p_tac=&ti=7&pt=5&ch=83&rl=5004
  11. “McDonald’s vs. Payday Lenders” California State University Northridge. Accessed March 6, 2017. http://www.csun.edu/~sg4002/research/mcdonalds_by_state.htm
  12. “Driven to Disaster: Car-Title Lending and Its Impact on Consumers” CFA. Accessed February 15, 2017. http://www.responsiblelending.org/other-consumer-loans/car-title-loans/research-analysis/CRL-Car-Title-Report-FINAL.pdf
  13. “Car-Title Lending” Center for Responsible Lending. Accessed February 13, 2017. https://www.tml.org/p/Center%20For%20Responsible%20Lending%20Car%20Title%20Loans%20Report.pdf
  14. “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
  15. “Every Day in Texas, 93 People Lose Their Cars to Auto Title Lenders” Texas Observer. Accessed March 22, 2017. https://www.texasobserver.org/every-day-in-texas-93-people-lose-their-cars-to-auto-title-lenders/
  16. “America’s First Consumer Financial Watchdog is on a Leash: Can the CFPB use its Authority to Declare Payday-Loan Practices Unfair, Abusive, and Deceptive?” Catholic University Law Review. Accessed March 22, 2017. http://scholarship.law.edu/cgi/viewcontent.cgi?article=1011&context=lawreview
  17. “FAQ” Texas Fair Lending Alliance. Accessed March 22, 2017. http://www.texasfairlending.org/resources/faqs/
  18. “Payday and Car Title Lenders Drain $8 Billion in Fees Every Year” Center for Responsible Lending. Accessed February 15, 2017. http://responsiblelending.org/sites/default/files/nodes/files/research-publication/crl_statebystate_fee_drain_may2016_0.pdf
  19. “The Fight Over Payday Lending, From the Capitol to the Campaign Trail” The Texas Tribune. Accessed March 22, 2017. https://www.texastribune.org/2014/01/15/payday-lending/
  20. “Summary of Texas Payday and Auto Title Lending City Ordinances” Texas Appleseed. Accessed March 22, 2017. https://www.texasappleseed.org/sites/default/files/City%20Ordinance%20Summary.pdf