Payday Loans in Austin, Texas
An OppLoans Guide to Getting The Help (and The Loan) You Need
Austin is a great city, with the best food, music and culture in Texas. While San Antonio might have The Alamo, Austin has the Alamo Drafthouse. And while Dallas might have The Cowboys, Austin’s got the team that matters the most: The Longhorns. But there’s another side to Austin too: growing poverty. In fact, according to some studies, the Austin metro area has one of the fastest growing poverty rates in the entire county.
For people living the below the poverty line — or even those living just above it — it can be hard to find help when disaster strikes. In times of emergency, they often lack the funds to help themselves, so they must go looking for help elsewhere. Fortunately, there are many services and organizations in Austin that can provide assistance in times of need.
Borrowing Money in Austin
Access to credit can be difficult to come by for people with lower incomes and/or poor credit histories. More often than not, they find themselves working with a lender who doesn’t care whether they can actually repay the loan. These lenders are perfectly happy to repossess the borrower’s car, sell their stuff or put them into an aggressive collections process. In Texas, these lenders can even exploit a legal loophole to have people thrown in jail for defaulting on their loan. If all this sounds pretty awful, that’s because it is! And there’s a term for it: it’s called predatory lending. Here are some guides about what kind of lenders to avoid in the Austin area, as well as a recommendation for a better kind of personal loan.
Payday Loans in Austin
You could end up in jail if you can’t repay this high-interest loan.
The payday loan and auto title industry in Texas takes in about 5.8 billion dollars per year.
That’s a lot of money. But the real cost of these loans — with their high interest rates and short repayment terms — are felt by the borrowers.
Payday loans are rarely for more than a few hundred dollars and often have terms that are less than a month long. They are also incredibly easy to get, as many lenders don’t even check the borrower’s credit history. As such, they are often loaned out to people who have low credit scores and low incomes.
The problem with payday loans is their interest rates. In Texas, the annual percentage rate for a payday loan can be well over 500%.
People who pay the loan on time won’t have to worry about paying five times what they were loaned, but the people who do have trouble might run into something called “rollover”. This is when the payday lender offers to extend the term of the loan in return for charging them an additional fee. Rollover traps borrowers into a cycle of debt. The borrower keeps extending the loan and keeps owing more on it until finally they owe far more than they could possibly repay.
Loan rollover is banned in many states, but it’s legal in Texas.
Furthermore, Texas state law even allows lenders to have people arrested when they default on their payday loan.
If you would like to file a complaint against a payday lender in Austin, contact the Texas Office of Consumer Credit Commissioner at (800) 538-1579 or the Consumer Financial Protection Bureau at (855) 411-2372.
Title Loans in Austin
The cash is quick, but if you lose your car you’ll be moving pretty slowly.
Title loans are a simple and quick way for people with poor credit to get a large amount of cash. So long as they own their vehicle, they can hand over their car title to the lender in exchange for a loan based on the vehicle’s value — though usually only for a fraction of what it’s actually worth. Once they pay the loan off, the lender returns their title. Sounds great! The only problem with this scenario, is that oftentimes the borrowers can’t pay the loans back. And when that happens, the lender repossesses the vehicle. Sounds not so great! In fact, that sounds pretty awful!
The reason that so many people are unable to repay their loans is because they come with high interest rates and short repayment terms. In Texas, title loans can have an annual percentage rate (APR) of up to 243%-289%. The repayment term for some of these loans is only a month and the terms are rarely longer than 180 days. Since these loans can be made for thousands of dollars, that doesn’t leave the borrower much time to pay back the loan plus interest.
Some borrowers try to roll the loan over — extending the expiration date in return for additional fees — but that rarely works out. In fact, it usually does just the opposite. It traps the borrower into a vicious cycle of debt. Loan rollover is so bad that in most states it’s banned entirely — but not in Texas.
So while a title loan may be an easy way to get fast cash, it can be an even easier way to have a vehicle repossessed. If you would like more information or would like to lodge a complaint against a title lender in Austin, please contact the Texas Office of Consumer Credit Commissioner at (800) 538-1579 or the Consumer Financial Protection Bureau at (855) 411-2372
Pawn Shops in Austin
Is a small-dollar, high-interest loan really worth the risk of losing your stuff?
Pawn shops in Austin can be a great place to go shopping for fun knick-knacks, memorabilia or electronics. But they also serve another purpose: they offer secured loans based on collateral brought in by their customers. Actually, most of that fun stuff on their shelves for sale was probably once collateral in a failed loan.
Pawn shop loans are rarely for more than a few hundred dollars, though can be for higher amounts. It all depends on the value of the item that’s being pawned by the borrower. In Texas, the annual percentage rate (APR) for a pawn shop loan can be as high as 240%
and the maximum repayment term is only a month. This a much higher APR than a standard personal loan, even though the loan is backed by collateral. It doesn’t matter whether or not the borrower is able to pay because the pawn shop still makes a profit.
While borrowers stand to lose a lot less than they would with a title loan, they still might lose their property if they are unable to pay back their pawn shop loan. Due to the low dollar amounts, the high interest rates and the risk of property loss, pawn shops can be a pretty dodgy solution for paying off emergency expenses. If you would like to file a complaint against a pawn shop in Austin or would like more information, contact the Texas Office of Consumer Credit Commissioner at (800) 538-1579 or the Consumer Financial Protection Bureau at (855) 411-2372
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