How do Payday Loans work in Texas?
Are you wondering how do payday loans work in Texas? You are not alone because payday loans have become a very popular method of paying off your short-term debts. There are many companies that specialize in this type of loan. But in order to get the best deals it is important that you know how do payday loans work in Texas first.
How do Payday Loans work in Texas?
When most people think about how do Payday Loans work in Texas, they probably think that it is pretty confusing. In this article we are going to break down one by one the most frequent questions and doubts that people who want to find out before making a decision about whether they should request a loan in Texas.
Statute of limitations on payday loans in Texas
It is true that in the state of Texas, there is a statute of limitations on payday loans. Texas has some of the best consumer protections for payday loans.
Under Texas laws, the statute of limitations on payday loans is 4 years. This means that if you default, the lender has 4 years to sue you for the balance. If they don’t initiate a lawsuit within this period, they can’t sue you at all.
Texas Payday Lending Statutes
Credit Access Businesses in Texas can provide loans by the state regulations lined in 7 Tex. Admin. Code and Tex. Fin. Code Ann. §§342.251 et seq
What are the laws in Texas for payday loans?
Payday lending in Texas is regulated by the following statutes.
Texas Laws
Texas Finance Code, Chapter 393
Many, but not all, businesses offering payday loans are regulated by this chapter. Credit services organizations are sometimes referred to as CSOs.7 TAC 83 subchapter B, "Rules for Credit Access Businesses"
The Office of Consumer Credit Commissioner's regulations regarding credit access businesses.Office of Consumer Credit Commissioner, Credit Access Business resources
This portal for credit access businesses links to primary law as well as agency advisory letters, reporting requirements, and required licensing forms.
Local Regulations
- Payday Lending Clearinghouse This webpage from the Texas Municipal League covers recent changes in local regulation of payday lenders. It provides access to news updates, lawsuit pleadings, relevant reports, and sample ordinance language.
- Austin Code of Ordinances Ch. 4-12 "Registration of Credit Access Businesses," effective 1/1/2012.
- Balcones Heights Ordinances, Ch.121: Credit Services Businesses This chapter enables monitoring of credit access businesses in an effort to reduce abusive and predatory lending practices. It was added by Balcones Heights Ordinance 2013-11 with the effective date of 8/1/2013.
Ch. 50, Art. XI "Credit Access Business," effective 1/1/2012
Ch. 51A, Art. IV "Zoning Regulations". Several sections of this chapter were amended by an ordinance which created a new alternative financial establishment use, Ordinance no. 28214 [PDF].Denton, Ordinance 2013-073 [PDF]
This ordinance has not yet been codified, but pertains to credit access businesses and was effective 4/8/2013.- El Paso Code of Ordinances Ch. 5-17, "Credit Access Businesses," effective 1/8/2013.
- Houston Code of Ordinances Ch. 28, Art. XV, Div. 1, "Credit Access Businesses," effective 7/1/2014.
- San Antonio Code of Ordinances Ch. 16, Art. 16 "Credit Access Business," effective 1/1/13.
- Tex. Fin. Code Ann. §341.00.
- Tex. Fin. Code Ann. §342.007 and §342.008
- Fin. Code Ann. §§342.251 et seq.
- Fin. Code Ann. §342.601 et seq.
- Fin. Code Ann. §393.221 et seq. and §393.604 et seq.
- 7 Tex. Admin. Code §83.6004 and §83.1001 et seq.
Regulations apply to both online and storefront loan providers.
Payday Loan Lender Regulations
To operate in the state, lenders have to comply with the following regulations:
- All lenders must be licensed.
- All lenders must disclose all the loan information (terms, interest, fees, repayment period) before the loan documents are signed.
Texas Payday Loan Regulations
Since studying and understanding legal regulations to learn how do Payday Loans work in Texas can be tedious and complicated, we have summarized the characteristics of approved payday loans in Texas.
Texas Payday Loan Regulations
- Legal Status: Legal
- Interest Rate (APR): can exceed 400%
- Maximum Loan Amount : Not Specified (on average $800)
- Minimum Loan Term : 7 days
- Maximum Loan Term : 180 days
- Number of Rollovers : No restriction (no more than 3 if the City Ordinance was adopted)
- Number of Outstanding Loans : Not Specified
- Cooling-off Period : None
- Installment : Yes
- Finance Charges :
- >$30 => $1 for each $5
- [$30 – $100] => 1/10 of the loan amount + $3 /mo (<$35)
- [$35 – $70] => $3.50/mo + $4/mo (>$70)
- >$100 => $10 + $4/mo for each $100
- Statute of Limitations : 4 years
- Database Loan Tracking : No
Are Payday Loans LEGAL in Texas?
In short words, yes.
Payday Loans are Considered Legal in the State of Texas.
The state of Texas has some of the best consumer protections for payday loans, as we know. Texas has approved two types of payday loans:
Single Payday Loan (due within two weeks or one month)
Multiplies installment loans (due within 6 months).
In other hand, Texas has no specified maximum loan amount that borrowers can take. In Texas for example, tif you already have a $500 loan, the same lender or any other lender could give you another $500 loan.
There is no fixed maximum financing fee either (APR can be more than 400%).
Fees and other charges applicable to the loan vary regarding the loan amount.
Are ONLINE payday loans legal in Texas?
Again, YES..
Online payday loan are legal in Texas.
Regulations apply to both online and storefront loan providers. This means thata online loan works under the same laws as Payday Loans in Texas. Hence, online payday loan are legal in Texas too.
How many payday loans can you have in Texas?
A common question anybody struggling with payday debt has asked is
The short answer is: yes. In Texas the law allows you to get multiple payday loan to deal with temporary financial problems. You usually can get another payday loan.
A common question anybody struggling with payday debt has asked is ‘Can I get another payday loan if I already have one?’.
The short answer is that yes, usually you can get another payday loan.
Payday Loan requirements Texas
About 12 million Americans use payday loans each year, and most of them do not have access to a credit card or savings account, according to the Pew Charitable Trust.
The basic requirements for a payday loan are a source of income, a checking account, and valid identification. This means that borrowers must be at least 18 years old.
Payday loans are accessible to consumers with poor credit and usually do not require a credit check.
Now that you understand how do Payday Loans work in Texas, you can have the confident to get an instant payday loan online, a cash advance, or a quick short term loan from InstantInstallmentLoan.com, the leading online payday loan lender.
