Texas Payday Loan Laws

Texas has a huge problem with payday load companies seeking out loopholes within the laws listed below. There are thousands of payday loan services all over the state and more than 3,000 of them are being watched for predatory lending practices.

• Maximum Payday Loan Amount – $500 dollars
• Minimum Payday Loan Terms – 7 days
• Maximum Payday Loan Terms – 31 days
• Maximum Quantity of Outstanding Payday Loans – Unspecified, $500 total
• Maximum Amount of Payday Loan Extensions – None
• Maximum Payday Annual Percentage Rate (APR) – 309 percent
• Maximum Payday Financing Interest Fees – $12 dollars
• Maximum Payday Annual Financing Interest Rates – 48 percent and $10 dollars
• Maximum Allowed Criminal Actions – Unspecified

These companies are claiming not to be payday lenders, but Credit Services Organizations (CSOs) instead. Most payday loans in Texas range from $100 dollars to $500 dollars. However, these so-called CSOs are using the loophole of only guaranteeing a loan instead of actually doling out the cash t their facility. The actual lender is usually always affiliated with the payday lender in some way. Many times a family member owns the actual lending company or the payday lender has set up a shell and operates internationally.

These CSOs are charging well over the usury payday loan APR for these loan guarantees. As of now, this is technically legal because they do not fall under the payday laws and regulations. The maximum of 309 percent APR under Texas payday laws is completely disregarded. In some cases, as much as 500 percent APR is being added to their fees for “securing” a loan.

Texas law has yet to cap the number of payday loans an individual can carry at one time, but the maximum total for all active loans cannot exceed $500 dollars at any given time. Customers are safe from criminal proceedings if they do default on a payday loan under the current regulations. A typical loan usually lasts between seven to fourteen days. On a two-week payday loan, the lender can only charge a maximum $10 dollar fee along with what works out to be a 48 percent APR rate. In some cases, payday lenders can also add on a handling fee as well.

Payday loan companies are thriving so well in Texas that 75 percent of their clients max-out their lending privileges within the first two week of taking on a payday loan. The desperate consumer buys in to the payday lender propaganda that these small loans will help him or her out of their financial problems. Instead, the client is now caught in a whirlpool of looming debt due to the high interest rates on these loans and the usual short time to pay them back. There are many looking to outlaw payday loans altogether.

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