El Paso becomes 4th Texas city to regulate payday loans

Since 2011, Dallas, Austin, San Antonio and now El Paso have passed city ordinances meant to protects their citizens from payday & car title "predatory" lenders.  LaredoTejas has reported on the spread of these type of businesses in the Gateway city especially since the economy headed South in 2008.

Will Laredo become the fifth city to pass such an ordinance to protect its most vulnerable citizens?  Given the heavy, pro-business leanings of the current city counicl, the answer would probably be "no".





From The El Paso Times

The City Council on Tuesday approved an ordinance to regulate payday- and car-title loan businesses.

El Paso became the fourth city in Texas to adopt such an ordinance in the hope that the state Legislature will take action to protect consumers from high-cost payday and auto-title loans. Dallas, Austin and San Antonio have taken similar initiatives.

The new city ordinance limits payday loans to 20 percent of the borrower's gross monthly income and auto-title loans to either 3 percent of the borrower's gross annual income or 70 percent of the vehicle's value. The ordinance also limits the number of installments to four, and rollovers and renewals to three. In addition, lenders will have to provide borrowers financial counseling information.

Texas borrowers pay an average of $840 or more for a $300 loan and about $1,000 per month in fees for a $4,000 auto title loan, according to the Texas Fair Lending Alliance.

The ordinance will become effective in July and will increase people's ability to pay their loans.

Dallas Councilman Jerry Allen was in El Paso on Tuesday to speak in favor of the payday-loan ordinance. He led the Dallas council to pass a similar ordinance last year.

Allen said the purpose of the ordinance is not to put the payday- and title-loan industry out of business. "We just want to be fair," he said.

He said that hardworking people do not have other places to go when they are facing financial problems and end up paying more for these loans.
Allen said the new city regulations will put an end to that cycle of debt and will send a message to state legislators to regulate the fees imposed on these types of loans.

"It's very, very important that we send this message as cities that we are no longer going to stay on the side and watch our people being taken advantage of," he said.