The Truth About PayDay Loans in Texas

The Truth About PAYDAY LOANS IN *TEXAS* > Texas is the base of operation for some of the largest nationwide payday lenders. With its lax regulations, Texas is estimated to provide the industry with more than 60% of its national profit. " But are these loans toxic for the people who need them most? A Look at the AVERAGE BORROWER » What is required to get a payday loan? 81 BANK An open bank account Reliable source of income Identification Federal law now makes it illegal to grant payday LOANS TO MILITARY PERSONNEL. D » Why do people take out payday loans? 11 18% 11% 1% Other 23% 35% 58% 40% No hassle, less dentification maxed required No credit Denied by bank/credit Credit cards check Privacy, no questions lout Jasked It's union quịck and easy * Percentages do not add up to 100, as respondents chose multiple answers. » Who takes out payday loans in Texas? Borrowers by Gender and Ethnícity Borrowers by Age 36% 32% 35% Nonwhite Female 25-34 White Male 12% 18-24 23% 14% 10% 22% 55+ 35-44 16% Nonwhite Male White Female 45-54 2$ Borrowers by Income » Less than $15.000 » $15.000 - $24.999 » $25.000 - $34.999 » $35.000 - $49.999 » $50.000 - $74.999 » $75.000 - $99.999 » $100.000 - $149.999 » Who takes out payday loans in Texas? A study on payday loan borrowers by the George Washington University Financial Services Research Program revealed that: WHY DON'T THEY GO ELSEWHERE? 1 50.6% 17.5% of borrowers of borrowers said they thought it was their only option could have used funds in a checking/savings account. OF THOSE WHO CONSIDERED ALTERNATE 49% 23.3% LOANING RESOURCES: considered considered borrowing from friends and family. banks. Payday LENDERS IN TEXAS MAY 1 OUT OF lending storefronts in the USA are located in Texas, 213 EVERY 8 PAYDAY Auto Tittle Loans Payday Loans 16% 28% 82% 180% 450% 590% 700% Credit Cards Secured Loans Signature Loans Pawn Loans Per $100 borrowed over 2 weeks Auto Tittle Loans Payday Loans $0.61 $1.07 $1.91 $4.43 $7.00 $15.42 $16.99 $35.00 Credit Cards Secured Loans Signature Loans Pawn Loans Avarage Amout of Interest & Fees AVERAGE LOAN AMOUNTS > $300-$700 [1] RECURRING FEE PAYMENTS MORE CREDIT Incurred when a borrower extends their loan. Does NOT go towards the amount owed. This means the borrower pays fees, but makes no headway on the actual loan. THIS CAN START WHAT IS CALLED A "CYCLE OF DEBT." Typical APR = 500-700% OR MORE. "1 What are the EXISTING REGULATIONS? JUN There are no rate caps for payday loans through CREDIT SERVICE ORGANIZATIONS (CSOS), 11 TEXAS DOES HAVE cso laws regulate credit repair LENDING REGULATIONS businesses. BUT THE CSO EXCEPTION ALLOWS PAYDAY A CSO may arrange loans as a third party between a borrower and lender. LENDERS TO GET AROUND APR CAPS. They do not technically not give out credit, therefore, these fees are not considered interest and do not fall under standard APR capvs. There is no cycle of debt protection for consumers. There is no limit to the number of back-to-back loans. IN 2011,Texas voted to require lenders to obtain state licenses, disclose loan rates to borrowers, and report their practices to the Office of the Consumer Credit Commissioner (OCCC), However, no laws were passed to PROTECT Since the requirement was passed, 2,722 PAYDAY LENDERS were registered. "JUN LAW CONSUMERS FROM HIGH APRS AND 756 APPLICATIONS ARE FEES. STILL PENDING. 2I » Some cities are trying to implement local regulations. > DALLAS > AUSTIN > SAN ANTONIO In 2011, Dallas passed an ordinance requiring payday lenders to: 141 In August 2011, Austin passed similar ordinances as Dallas in order to increase loan transparency. 16 This included: » Register with the city » Restrict loan extensions » Registering with the city » Collecting data on its operations » Issuing a cap on loan amounts » A cut off on the number of loans one can take out » Disclose tems of Residents have recently shown their support for a proposed ordinance that would impose city regulation on predatory lending. m repayment A lawsuit was filed in response by Consumer Services Alliance of Texas (CSAT), 15) CSAT also filed a lawsuit. ......... » Both lawsuits are still in litigation. PAYDAY LOANS MAY SEEM LIKE A QUICK WAY TO GET CASH, BUT THEY ARE ALWAYS ACCOMPANIED WITH MASSIVE FEES AND HIGH APRS. WHILE PEOPLE ARE FIGHTING FOR FURTHER CONSUMER PROTECTIONS, LIKE RATE CAPS, IS UP TO THE CONSUMERS TO PROTECT THEMSELVES AND THEIR WALLETS. SOURCES: [1] http://www.austintexas. gov/edims/document.cfmid3D169418 [2] http://www.ocCc.state.tx.us/pages/agency/stratplan_17.pdf [3] http://www.occc.state.tx.us/pages/industry/CAB/Fillable%20Payday% 20Multiple%20Pay%20Disdosure% 20(Dec%2012).pdf [4] http://www.texastribune.org/texas-issues/predatory-lenders/faced-city-ordinances-payday-lobbies-reappear/ [5] http://www.consumerserviceallianceoftexas.org/CSATDallasLegachallengePRO7-15-11.pdf [6] http://www.bizjoumals.com/austin/news/2012/06/18/payday-lenders-file-city-of-austin. html [7 http://www.mysanantonio.com/news/local_news/artide/Council-committee-forwards-payday-lending-3791455.php [8] http://www.paydayloaninfo.org/facts#3 (9] http://www.usa.gov/topics/money/credit/loars.shtml [10] http://www.dallasfed.org/microsites/cd/epersp/2012/2_2.cfm