Changes To Payday Loans In Texas

Texas Payday Loans can be a good option for those who are having an emergency pertaining to their personal finances. New laws and regulations taking effect in cities across Texas are aiming to stop predatory practices by payday loan companies. In this post, I will cover these new laws and how they effect the lenders themselves, as well as those seeking a payday loan.

The cities of Dallas, Houston, and San Antonio are a few of the cities affected by the recent passage of new legislation placing limits on payday loans within each respective city. The process for acquiring these loans have been largely unchanged. However, there have been large changes to the amounts allowed by these loans as well as where payday lenders may be located within the city.

The new laws and ordinances look very much the same for all three cities, each requiring that the amount of the loan cannot exceed 20% of a person's monthly income. They have also placed limits on the number of payments that can be used to pay back the loan. Loans can no longer be paid back in more than four installments. Beyond these new regulations to cap the loan amounts are rules requiring that the lenders be registered with the city for a small fee, on top of the new zoning regulations requiring that lenders set up locations in specific areas of the city.

These new regulations have drastic effects on those seeking loans as well as lenders. With the new limiting regulations, those seeking loans are limited in the amount they may take out by their gross monthly income. On the other hand, however, this can be a benefit by making the loan much easier to repay in order to avoid sinking into debt. Houston Payday Loans, for example, are limited to 20% of the loan seeker's gross monthly income, and are required to be paid back in a maximum of four installments.

Dallas Payday Loans are also limited by zoning laws requiring that they be built no less than 1,500 feet away from other lenders, 500 feet from highways, and 100 feet from private residences. This effectively limits the number of payday lenders within the city, thereby leaving options for receiving a payday loan a bit limited. San Antonia Payday Loans, however, are not limited by these zoning regulations.

Each of these new regulations have their pros and cons for loan seekers. Let's take a quick look at each of these laws and see what they mean for you.

Loan amounts are maximized at 20% of a borrower's monthly income. This means the amount they can borrow is extremely limited. Let's assume for just a moment here that you make $3,500 per month. This means that you can take out a loan of no more than $700. Now, couple this with the law requiring that loans be repaid in no more than 4 payments. This means, that before interest, you will be paying back a rate of $175 per month. Please bear in mind that this is before interest. It is subject to change based on individual monthly interest rates. This is merely an example. This is in huge contrast to the lack of regulation in the past. While the new regulations do limit the amount you may borrow, they also drive up the monthly payments required to pay off the total amount of the loan. As you can see, the new regulations are a double-edged sword, both protecting borrowers by limiting the amount they may borrow making it easier to keep from falling into debt, and simultaneously raising their monthly rates.

The new zoning laws keep the lenders from setting up in close proximity to one another. This makes it a bit harder for you to leave one lender's premises and go to another to take out a new loan. This is an attempt to keep people from circumventing the maximum amount on the loan by just taking out another from a nearby lender. While it is still entirely possible, it is made more difficult. The policy requiring them to remain 500 feet from highways and 100 feet from private residences ensures that lenders avoid situating themselves in the midst of a neighborhood or near a highway, thereby making it a bit harder for them to draw in customers by sight alone.

In short, payday loans in the state of Texas are changing drastically. They may still be a viable option for those in the midst of an emergency. However, with these ever-changing laws and regulations it is best to make sure that you know the laws governing payday loans in your area before deciding whether or not one is right for you.