Payday and Title Loans in

Houston, TX

Payday Loans in Houston: Subprime Report

At a Glance
Houston, TX

The fight for consumer protection begins at the city-level. For residents of Houston, TX, taking a stand against payday and title lenders has proven to be beneficial. By understanding the difficulties consumers are having with payday and title loans in Houston, lawmakers continue to take a stand to better protect its residents.1

While payday and title loans are still legal, Houston has taken steps in the right direction for improved consumer protection.1 To continue this fight, residents of Houston must continue to reach out to regulators and other legal associations for help.

A Timeline of Predatory Payday Lending in Houston and Texas
  • 2005:Payday lenders find a loophole in Texas law by registering as credit service organizations.2
  • 2006 - 2010:Payday loans in Texas go from 1,279 registered stores to more than 3,500.2
  • 2011:Texas Legislature approved modest disclosure and licensing requirements.3
  • April 18, 2011:Texas HB 2592 and HB 2594 passed and HB 2593 failed.4
  • January 1, 2012:Texas HB 2592 and HB 2594 go into effect.4
  • April 22, 2013:S.B. 1247 passed in the senate, but failed to gain approval in the house.4
  • November 22, 2013:Mayor Annise Parker moves forward with consumer protections, including business practices for payday lending institutions and city ordinances.5
  • December 4, 2013:Houston City Council is briefed on the mayor’s proposal.5
  • December 11, 2013:Houston City Council has their first opportunity to vote for new regulations.5
  • July 2014:Houston payday loan ordinance limits payday lenders activity.5
  • August 2016:40% of the licenses required to make payday loans have disappeared do to a transition out of state or online to avoid city regulations.7

Introducing Houston

Nicknamed “Space City” or “H-Town,” Houston is the largest city in Texas, and the fourth largest in the United States with a population of 2.196 million people.6 While the poverty rate of Houston, TX has slowly declined (down from 15.3% in 2014 to 14.6% in 2015), residents are still struggling to find jobs.7

Houston’s base of employment expanded by 14,800 jobs in 2016, but there was still a rise in the unemployment rate from 4.1 percent to 4.8 percent in 2015. At 4.8%, Houston slightly exceeds the nation’s 4.7 percent unemployment rate.10

The annual cost of living in Houston is approximately 7 percent above the national average, which might cause residents to seek new ways to make ends meet.10 However, turning to payday loans and title loans in Houston, TX would not be a wise decision.

Quick Fact

In 2015, lenders initiated $238.8 million in new loans in Houston.7

Houston Payday Loans

A payday loan is a small amount of money that is typically lent at a high rate of interest. When a lender provides a payday loan, the agreement is that it will be repaid when the borrower receives their next paycheck. However, many borrowers find it difficult to repay the loan plus interest in such a short time frame.

Payday loans are legal in Texas, but legislation continues to look for ways to regulate lenders. Unfortunately, payday lenders found a loophole that allows them to register as a Credit Services Organization.7 In doing so, payday lenders in Texas can charge unrealistic amounts in fees and interest—leaving you in an endless cycle of debt.7 This has left 75 percent of Houston residents (that currently have payday loans out) locked in a loan renewal cycle.7

While the state of Texas might have their hands tied in how to handle the wild west of payday loans, Houston is taking this fight into their own hands. In 2014, to better protect residents, Houston created local ordinances for payday loans by requiring borrowers demonstrate an ability to repay their loans.7 This means borrowers will need to show their monthly income before taking out a payday loan in Houston.

Because of this local ordinance, Houston made payday and title lending slightly less profitable. In fact, about 40% of the licenses required to make those loans have disappeared.7

A Personal Encounter with Payday Loans in Houston

Whether you’ve experienced the negative effects of payday loans in Houston or not, you might have heard about them. It’s disheartening, but by learning about the predatory ways of payday lenders in Houston, you can find ways around this “unhelpful” financial resource.

Let’s learn more about one Houston resident that found her way into the deadly grasp of a payday lender:

In “The Case for Payday and Auto Title Loan Reform” by Texas Faith for Fair Lending, we are introduced to Crystal Delacruz, a mother of two. To avoid being late on bills, racking up late charges, and having her utilities shut off, Crystal Delacruz decided to take out a payday loan in Houston.9 After receiving a flyer for payday loans in her neighborhood, she thought it was the fastest option. And it was—it only took 20 minutes to complete.11

After a year, Crystal Delacruz ended up paying $2,000 when her initial amount due was $965 (her $800 principle plus $165 in fees). 11 To get out of debt, Crystal Delacruz had to cut something off because it was the only way to come up with the money. 11

You can read more about Crystal and other Houston residents in Texas Faith for Fair Lending’s document.

“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, Houston Payday Loan Borrower

Profile of the Typical Houstonian Payday Borrower

In Texas, women represent 54% of all borrowers.12 Of those female borrowers, 32% are non-white and 22% are white.12 Most Texas borrowers earn between $10,000 – $35,000 a year and 35% are between the ages of 25-34.12

A Typical Payday Loan in Houston
  • # of Houston Payday Loan Transactions in 2012:1,207,820
  • Payday fee per $100:$22.00
  • Percent of Payday Customers Refinancing:63.31%
  • Average Payday Loan Size:$442

Houston Payday Loan News

Search the “News” section of Google for “Payday Loans in Houston”. What do you find? Pages upon pages of news stories about the predatory nature of payday loans. Each news story showcases battles between lawmakers and lenders, residents losing money, and other interesting topics, such as arrests.

To help you trudge through the stories, here are a few highlights:

From scammers to faith communities helping consumers, there’s a lot to be said about payday loans in Houston, TX.

Houston Title Loans

A title loan is like a payday loan, as it is used for a small amount of money for a short period of time. Unlike a payday loan, though, a title loan requires the title to your vehicle as collateral. On top of your vehicle’s title, you will also be required to pay interest on the loan over a period of 30-days. If you can’t pay back the loan, you could lose your vehicle.

Like Austin, Dallas, and other major cities throughout Texas, Houston has adopted stricter title loan regulations than the state generally has. That’s not saying too much though, since Texas has some of the loosest title loan regulations in the country. 1

Houston requires title loan providers to register with the city, and loan contracts must meet certain specifications. There are limits to the amount a lender can offer, the contract must be written in simple language, and the borrower must be given information about resources they can use if they fall behind in their payments. 1

A Personal Encounter with Title Loans in Houston

It’s easy to say you’d never be tempted to put your car at risk when things are going well, but it’s much tougher when you’re in a financial emergency and don’t see yourself as having any other options. That was the situation one Houston resident found herself in.

Mrs. K, a Houston grandmother, took out a title loan when she had trouble making rent. 11 Her loan was for $500 with a 317% APR. 11 She was expected to make monthly payments of $150 but was struggling to do so on her fixed income. 11 Mrs. K had to keep extending her loan and would have lost her car if it weren’t for the help of non-profit agencies that assist borrowers in over their head with debt. 11

“If there had not been funds from a nonprofit to get out of this loan, she would still be struggling and she would have lost her car,”

- said Jackie Kudlaty of Jewish Family Services in Houston.9

Another Houston resident, Tiffany Richardson, was profiled by the New York Times about her experience with title loans. Mrs. Richardson, a nurse, was forced to take out a title loan in Houston after her mother was diagnosed with cancer. [i]

Richardson took so much time caring for her mother, she lost her job. Without a source of income, she took a $5,000 loan out from a title lender in Houston. 14 When she fell behind on payments due to out-of-town training for a new job, she was forced to take out a second title loan with another car. She ended up losing both of those cars. 14

Now finally out of debt with a new job and a new car, she warns everyone she can to never use title or payday lenders. You can read more about Tiffany Richardson here.

[i] “Thousands in Texas Lose Cars Amid Calls for Loan Restrictions” The Texas Tribune. Accessed March 22, 2017. https://www.nytimes.com/2014/08/24/us/thousands-in-texas-lose-cars-amid-calls-for-loan-restrictions.html?_r=0

Profile of the Typical Houstonian Title Loan Borrower

In Pew’s survey, a title loan borrower has a gross annual median income of just under $30,000 (a little less than $2,500 a month).[i] People who use auto title loans typically report having trouble paying their bills at least half the time, and use these types of loans to cover regular bills—only 1 in 4 uses them for unexpected expenses. 15

[i] “Auto Title Loans” The Pew Charitable Trusts. Accessed April 17, 2017. http://www.pewtrusts.org/~/media/assets/2015/03/autotitleloansreport.pdf

Typical Houstonian Title Loan Borrower Data
  • 2012 Auto-Title Transactions:236,749
  • Auto-Title Fee per $100:$23.40
  • Percent of Auto-Title Customers Refinancing:49.27%
  • Average Auto Title Loan Size:$1,043
  • Repossession rate in 2012:2.82%
  • Repossessions (transactions per repossession):7,291 (32.5)16

Houston Title Loans News

To help you become acquainted with title loans in Houston, we’ve complied a couple recent news stories for you to read:

  • As payday and title lenders are pushed from Houston due to new regulations, some wonder whether poor locals are actually better off. Are they able to find better options, or are they just driving outside of the city or turning to online options? Continue reading “Payday Lenders Retreat in the Face of New Regulations…”

Each news article shows how Houston residents are struggling with title loans—where’s the relief?

Payday and Title Lenders Respond to Houston Ordinance

With new payday and title loan ordinances in Houston in effect, how did lenders react? In 2014, city ordinances didn’t appear to do much to deter payday lenders from doing business. Drawing on the experiences of Austin, Dallas, and other cities, Houston did not expect any payday lenders to close their businesses. [i]

As long as payday and title lenders in Houston continue to operate profitably, they will continue to do business, complying with the new regulations. However, instead of complying with the new regulations in Houston, many lenders might attempt to find loopholes, such as redirecting a consumer to rollover a loan in a store outside of Houston. 17

In fact, State Rep. Gary Elkins (R-Houston), helped to pioneer the current model in which payday lenders operate as “credit service organizations” and can avoid Texas’ laws against usury. 17 What makes matters worse is that he even owns a chain of payday stores across the state. He continues to fight Legislature and in court to prevent any new regulation of the industry. 17

While trying to kill off a package of modest reforms sponsored by former republican state Rep. Vicki Truitt, Elkins once told the Texas House that he is “Not ashamed of what” he does. 17 Ironically, Truitt is now a lobbyist for ACE Cash America, a payday firm that was just levied a $10 million fine for illegally coercing borrowers into taking on more debt. 17

He led a fight against payday loan controls while candidly acknowledging that the proposed restrictions would hurt his personal payday loan businesses. 17

[i] “Weak laws leave ethics gap” Houston Chronicle via PressReader. Accessed April 17, 2017. http://www.pressreader.com/usa/houston-chronicle-sunday/20130106/284614599885632

Helping Consumers in Houston

If you are experiencing a threatening title or payday lender in Houston, or if the lender is not following the ordinances of the city, it is important to speak out.

By filing a complaint with the Houston Permitting Center, you can help lawmakers create tighter restrictions on title and payday loans in Houston. To file a complaint, call the Houston Permitting Center at (832) 394-8803, or by emailing Houstonpermithelp@Houstontx.gov.

To file a complaint against a payday or title lender in Houston, TX, first ensure the lender is within the city limits. If the company is within the city of Houston, you can submit a completed complaint form along with copies of any related loan documents, fliers, disclosures, and forms to the Administration & Regulatory Affairs (ARA).

For an in person filing, please visit:

Houston Permitting Center

Administration & Regulatory Affairs-Commercial Permitting & Enforcement Section

1002 Washington Avenue

Houston, TX 77002

For mailing your complaint, please send to:

Houston Permitting Center

Administration & Regulatory Affairs-Commercial Permitting & Enforcement Section

P.O. Box 1561

Houston, TX 77251-1561

Once your complaint is received, the Houston Permitting Center will review the forms to ensure the application and required documentation is complete. If the information is correct, it will be submitted to the City Attorney’s office for further investigation and prosecution when applicable.

Houston’s payday and title loan ordinance went into effect on July 1, 2014.[i] Any complaints against loans taken out before June 30, 2014 cannot be prosecuted by the city’s legal department, so pay attention to the dates of your loan. 18  And, if a payday or title lender is not within Houston city limits, the ordinance is out of their jurisdiction. 18

[i] “Credit Access Business (Payday and Car Title Lenders)” The City of Houston. Accessed April 17, 2017. http://www.houstontx.gov/ara/regaffairs/commercialpermitting/creditaccessbusiness-details.html

The Support of Companies and Individuals in Houston

Throughout the payday loan and title loan fight in Houston, TX, there have been several individuals and companies standing with consumers—some of them well-known faces in the city. AARP Texas released a statement by Texas State Director Bob Jackson in 2013, stating, “We commend the action by the City Council, under the strong leadership of Mayor Parker, to bring this much-needed economic relief to the residents of the nation’s fourth largest city.”[i]

[i] “Payday Lending Vote by Houston City Council Sends Message to Texas Legislature” AARP. Accessed April 17, 2017. http://states.aarp.org/payday-lending-vote-by-houston-city-council-sends-messafe-to-texas-legislature/

Quick Fact

With the vote for stricter restrictions on payday loans and title loans in Houston, Texas State Director Bob Jackson said, “It’s encouraging that a coalition of faith and community leaders and local officials has taken on an issue pitting money vs. morality and come out with a resounding victory that will help Houstonians avoid falling into money traps and seemingly endless cycles of debt.”19

And Jackson was right, Houston did owe a lot to Mayor Annise Parker. In 2013, Mayor Parker’s recommendation was endorsed by the following members of the Houston Fair Lending Alliance:

 

  • AARP
  • Catholic Charities of the Archdiocese of Galveston-Houston
  • Covenant Community Capital
  • Christian Life Commission
  • Family Services of Greater Houston
  • Neighborhood Centers, Inc.
  • Skills for Living
  • Texas Appleseed
  • Texas Catholic Conference
  • One Voice Texas
  • United Way of Greater Houston

Parker believes that joining other Texas cities in a united front would be the best way to send a strong message to the Texas legislature. [i]

[i] “Mayor Parker Moves Forward With Consumer Protections For Payday Lending” The City of Houston. Accessed April 17, 2017. http://www.houstontx.gov/mayor/press/20131122.html

Quick Fact

Mayor Annise Parker said, “Lenders deserve to make a profit on their investments, but not by charging astronomical interest rates to desperate consumers who have nowhere else to turn for emergency financial assistance. The statewide model I am recommending for approval by Houston City Council achieves this balance.”20

Going along with Mayor Annise Parker’s viewpoints, Senator Rodney Ellis (D-Houston) said, “Critical oversight is lacking over lending agencies who can legally charge triple-digit interest rates on emergency, car-title, and paycheck-advance loans where the end result is usually an unbroken cycle of continuous debt.” [i]

With so many representatives and senators speaking out against payday and title loans in Houston (and all over Texas), why hasn’t the entire state jumped on board with regulations?

[i] “Lawmakers: Time to stop subprime and payday lenders preying on minorities” Senator Eliot Shapleigh. Accessed April 17, 2017. http://shapleigh.org/news/2902-lawmakers-time-to-stop-subprime-and-payday-lenders-preying-on-minorities

Outside Help for Payday and Title Loans in Houston

Further help can be found through outside legal groups. One foundation is the Community Loan Center of Greater Houston (CLCGH), which is an alternative option to the predatory lenders. The CLCGH offers alternative means for finding financial stability that won’t keep you locked in an endless debt trap caused by payday loans and title loans in Houston.

For legal assistance, Texas Appleseed is also available to help. Texas Appleseed works with residents of Houston, as well as other cities across Texas, to fight against predatory lending. If you need help with payday loans or title loans in Houston, Texas Appleseed can work with you to fight predatory lending.

Houston Stats, Facts and Figures

In Houston alone, payday lending is siphoning an estimated $70 million annually out of our neighborhoods. 11

 

Houston Single Payment Payday and Auto Title Loans:
  • 2012 Payday Transactions:1,207,820
  • Payday fee per $100:$22.00
  • Percent of Payday Customers Refinancing:63.31%
  • Average Payday Loan Size:$44213
  • 2012 Auto-Title Transactions:236,749
  • Auto-Title Fee per $100:$23.40
  • Percent of Auto-Title Customers Refinancing:49.27%
  • Average Auto Title Loan Size:$1,043
  • Repossession rate in 2012:2.82%
  • Repossessions (transactions per repossession):7,291 (32.5) 13

Guides to Payday Loans in Texas Cities

Texas Subprime Reports

See more local Texas guides below:

Arlington | Austin | Dallas | El Paso | Fort Worth | Houston | Irving | Killeen | McAllen | Plano | Round Rock | San Antonio | Tyler | Waco

References:

[1] “Houston joins cities regulating payday, title loans” Houston Chronicle. Accessed March 22, 2017. http://www.chron.com/neighborhood/bellaire/news/article/Houston-joins-cities-regulating-payday-title-9538478.php

[2] “Texas: Payday Lenders Skirted Regulation by Calling Themselves Credit Service Organizations” Allied Progress. Accessed March 22, 2017. http://paydaylendingfacts.org/2016/07/25/texas-lenders-skirted-regulation-calling-credit-service-organizations/

[3] “Time to put payday lenders in check, lawmakers suggest” Houston Chronicle. Accessed April 17, 2017. http://www.houstonchronicle.com/news/houston-texas/houston/article/Time-to-put-payday-lenders-in-check-lawmakers-4068303.php

[4] “Texas Cities Respond to Payday Lending” Houston Law Review. Accessed April 21, 2017. http://www.houstonlawreview.org/wp-content/uploads/2015/01/10-Seeger.pdf

[5] “Mayor Parker Moves Forward With Consumer Protections For Payday Lending” The City of Houston. Accessed April 17, 2017. http://www.houstontx.gov/mayor/press/20131122.html

[6] “Houston Population 2017” World Population Review. Accessed March 22, 2017. http://worldpopulationreview.com/us-cities/houston-population/

[7] “To beat payday lenders, an alternative needs banks to help out” Houston Chronicle. Accessed March 22, 2017. http://www.houstonchronicle.com/business/texanomics/article/To-beat-payday-lenders-an-alternative-needs-9145956.php

[8] “2016 ends with marginal job growth in Houston” Houston Chronicle. Accessed March 22, 2017. http://www.houstonchronicle.com/business/article/Houston-unemployment-rate-tops-national-average-7886251.php

[9] “The Case for Payday and Auto Title Loan Reform” Texas Faith for Fair Lending. Accessed March 22, 2017. http://www.austintexas.gov/edims/document.cfm?id=169413

[10] “SA’s Payday Lending Ordinance Still Short on Change” San Antonio Current. Accessed March 22, 2017. http://www.sacurrent.com/sanantonio/sas-payday-lending-ordinance-still-short-on-change/Content?oid=2324637

[11] “The State of Payday and Auto Title Lending in Texas” Center for Public Policy Priorities (CPPP). Accessed April 25, 2017. http://forabettertexas.org/images/EO_2013_09_StateofPayday_final_FINAL.pdf

[12] “Thousands in Texas Lose Cars Amid Calls for Loan Restrictions” The Texas Tribune. Accessed March 22, 2017. https://www.nytimes.com/2014/08/24/us/thousands-in-texas-lose-cars-amid-calls-for-loan-restrictions.html?_r=0

[13] “Auto Title Loans” The Pew Charitable Trusts. Accessed April 17, 2017. http://www.pewtrusts.org/~/media/assets/2015/03/autotitleloansreport.pdf

[14] “The State of Payday and Auto Title Lending in Texas” Center for Public Policy Priorities (CPPP). Accessed April 25, 2017. http://forabettertexas.org/images/EO_2013_09_StateofPayday_final_FINAL.pdf

[15] “Weak laws leave ethics gap” Houston Chronicle via PressReader. Accessed April 17, 2017. http://www.pressreader.com/usa/houston-chronicle-sunday/20130106/284614599885632

[16] “Credit Access Business (Payday and Car Title Lenders)” The City of Houston. Accessed April 17, 2017. http://www.houstontx.gov/ara/regaffairs/commercialpermitting/creditaccessbusiness-details.html

[17] “Payday Lending Vote by Houston City Council Sends Message to Texas Legislature” AARP. Accessed April 17, 2017. http://states.aarp.org/payday-lending-vote-by-houston-city-council-sends-messafe-to-texas-legislature/

[18] “Mayor Parker Moves Forward With Consumer Protections For Payday Lending” The City of Houston. Accessed April 17, 2017. http://www.houstontx.gov/mayor/press/20131122.html

[19] “Lawmakers: Time to stop subprime and payday lenders preying on minorities” Senator Eliot Shapleigh. Accessed April 17, 2017. http://shapleigh.org/news/2902-lawmakers-time-to-stop-subprime-and-payday-lenders-preying-on-minorities