Payday Loan in McAllen, Texas
An OppLoans Guide to Getting The Help (and The Loan) You Need
When an emergency arises or an unexpected expense rears its head, many people in McAllen lack access to traditional financial tools to dig themselves out. And when they encounter larger issues like mental illness, addiction or chronic health problems, they might not know where to go to find help. Fortunately, there are many places in McAllen that can give them assistance in their time of need.
Borrowing Money in McAllen
People who live in McAllen and have low incomes or poor credit histories are usually excluded from getting loans from traditional lenders. So when their car breaks down or their kid needs an emergency appendectomy, they often find themselves turning to non-traditional lenders to get the funds they need. Many of these are predatory lenders. Payday loan stores, title lenders and pawn shops are three places where predatory lending is rampant. By taking some time to learn more about them, you can hopefully avoid taking out a loan that ruins your financial future.
McAllen Payday Loans
“Fast cash now” can easily turn into “huge debts later”.
In Texas, payday and title lenders take in approximately 5.8 billion dollars per year.(1) The industry makes that hefty profit by issuing short-term, high-interest loans to people who lack better financial options. The terms for these loans are rarely longer than a month and they carry an annual percentage rate (APR) that can be as high as 500%.(2) That means that if one of these loans was taken out for an entire year, the amount that the customer would pay in interest and fees would be over five times the amount they originally borrowed.
The most predatory practice of payday lenders in McAllen — and Texas in general — is something called “rollover.” (3) This is when the lender extends the term of the loan and charges the borrower additional fees and interest. In theory, it gives people more time to pay the loan back. But in reality, it just traps them into a cycle of debt. Every time the loan is rolled over, the borrower owes more. Eventually, they owe so much that they cannot realistically pay it back. At this point, the lender can get the courts and legal system involved so that they can get their money. Some lenders even exploit a legal loophole to have people who default on their loan arrested and thrown in jail.(4)
For people in McAllen who need cash in a hurry, there are better options than a payday loan. If you want to lodge a complaint against a payday lender in McAllen, 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 McAllen
Losing your car, truck or motorcycle is a distinct possibility with one of these loans.
For people in McAllen with poor credit who can’t get a personal loan from a bank, a title loan can seem like the only way to get thousands of dollars on short notice. All they have to do is hand over their car title to a lender. In return, they get a loan based on (a fraction of) the vehicle’s value.
Like any loan that is backed by collateral, the lender can repossess the borrower’s car if they are unable to repay. The bigger problem is that title loans have incredibly high interest rates and short repayment terms that make them very difficult to pay back at all. Instead of a great place to get fast cash, they become a great place to kiss your car, truck or motorcycle goodbye.
In Texas, the annual percentage rate (APR) for a title loan can get up to 243%-289% and the repayment terms are rarely longer than 180 days. In fact, the term for many title loans is only a month. Since the principals for many title loans are well over thousands of dollars, the borrower has to repay a lot of money in a very short amount of time. And if the lender offers to rollover the loan and extend the expiration date for an additional fee, this could trap the borrower into a debt cycle. The practice of rollover is so dangerous that in many states — but not Texas — it is banned entirely.
There are better options out there for someone in McAllen who needs a quick loan, ones that won’t put their vehicle at risk of repossession. If you want more information or would like to file a complaint about a title lender in McAllen, 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 McAllen
You risk losing your stuff and don’t get much in return.
Visiting a pawn shop in McAllen can be a fun way to spend an afternoon. They’re filled with all sorts of weird memorabilia, cool antiques and used-but-usable electronics. But while they might be a great place to browse for deals, they are not such a great place to get a loan. After all, that’s how most of that stuff they’re selling got there in the first place.
To get a pawn shop loan, the customer needs to bring in some kind of valuable item that the pawn shop can hold as collateral. The amount of the loan is based on the value of the item because the pawn shop is going to sell it if the loan doesn’t get repaid. Because the loans are secured by the value of household stuff, they are rarely for more than a few hundred dollars.
Even though the loan is backed by the borrower’s collateral, The APR for these loans in Texas can be as high as 240%(5) and the repayment term are only a month long. People who take out a pawn shop loan and want their stuff back better have a plan, because they aren’t given a lot of time. Between the high APR, the short repayment term and the risk of losing your stuff, pawn shop loans are rarely a great fit for emergency cash.
If you want to learn more about the pawn shop industry in Texas or would like to file a complaint against a pawn shop in McAllen, contact the Texas Office of Consumer Credit Commissioner at (800) 538-1579 or the Consumer Financial Protection Bureau at (855) 411-2372.
Texas Subprime Reports
- “Pulling Back The Curtain: Shining A Light on Payday and Auto Title Loan Businesses in Texas.” Texas Appleseed. Accessed February 9, 2016. https://www.texasappleseed.org/sites/default/files/Pulling%20Back%20the%20Curtain_0.pdf
- “Texas State Information.” PayDay Loan Consumer Information. Accessed February 9, 2016. https://www.paydayloaninfo.org/state-information/51
- “FAQs.” Texas Fair Lending Alliance. Accessed February 9, 2016. https://www.texasfairlending.org/resources/faqs/
- Hicken, Melanie. “In Texas, payday lenders are getting borrowers arrested.” CNN Money. Accessed February 9, 2016. https://money.cnn.com/2015/01/08/pf/payday-lenders-texas/
- “Texas Pawnshop Rate Chart – July 1, 2015 to June 30, 2016 Only.” Texas Office of Consumer Credit Commissioner. Accessed February 9, 2016. https://occc.texas.gov/sites/default/files/uploads/interest/p-rate-16.pdf
*OppLoans is not affiliated with any of the programs, services or organizations referenced on this page.