Anyone can find themselves in financial trouble. Whether it be an unexpected bill or a simple gap in your budget, if you’re considering a short-term loan in Austin, check out this guide before you apply.
Can I get a short-term loan in Austin, Texas?
Yes, payday loans are legal throughout Texas. In fact, Austin is one of 22 cities in Texas that have passed local ordinances with the aim of helping borrowers repay their loans successfully. The Austin payday loan ordinance requires all credit access businesses (CABs) that operate within city limits to register with the City’s Telecommunications & Regulatory Affairs (TARA) office.
Here’s a quick list of Austin laws short-term lenders must abide by:
Max payday loan amount: Loans can’t exceed 20% of your gross monthly income
Max auto title loan amount: 3% of your annual income or 70% of the vehicle’s retail value, whichever is less
Refinancing limts: You can renew three times provided you reduce the total amount owed by at least 25%
Installment loan limits: Loans can have a maximum of four installments and can’t be renewed
In order to qualify, you need to provide some documentation (paychecks, bank statements, tax returns, etc.) to confirm your income. You can request a copy of any document you need to sign, and you should. Keeping records of your loans is a good way to contest debt if your lender turns out to be disreputable.
City ordinances contested with state laws
As of May 2017, Austin is in the middle of an appeal process to determine whether its short-term loan ordinances violate Texas law. Depending on the judgements concerning this case, Austin’s oridances may be revoked. Keep an eye out for further news to be sure you’re up to date on what’s happening concerning short-term loans in the city.
Here’s why you might want a short-term loan in Austin
Limits on loan amount. The Austin payday ordinance limits the maximum you can borrow to 20% of your gross monthly income.
Plenty of options. Austin has both storefronts and online lenders you can choose from. If you don’t like the terms offered by one, you can always find somewhere better.
Get money quickly. If you apply at a storefront, you can walk out with your money. Online lenders will be able to transfer money into your bank account as soon as the business day.
Poor credit is accepted. Lenders are more concerned with your financial situation now than your problems in the past. Even if you don’t havve the best credit, you may still be able to get a short-term loan.
Here are the common short-term loan application steps
Have your Social Security number, proof of your income and details of your employment with you
Visit a storefront or the website of a lender
Follow the application steps, providing your personal information where necessary
If you’re applying online, fill out your bank account details
Sumbit the application and wait to see if you’re approved
If you’re approved, be sure you read your loan contract carefully. Lenders are required to clearly state the terms of your loan and how much you’ll have to pay.
Michael didn’t have enough money to cover his electricity bill after making his monthly car payment. He applied for a $100 loan and was approved for a term of two weeks. He read his contract carefully and found that in addition to paying back the loan, he would also have to pay a financing fee of $10, a handling fee of $4 and interest–bringing his total to $128.38.
At the end of the original loan term of 14 days, Michael didn’t have enough to pay back his loan. He refinanced his loan by putting down $50, which was over 25% of the original loan amount. He had to pay additional monthly handling fees as well as more interest.
By the time he paid off his loan, he wound up paying $113.53 in fees. The total cost of his $100 loan was $213.53.
Some lenders may offer a no credit check payday loan, but be wary as this could be a scam. All legit lenders will perform a credit check to confirm your identity, however, they rarely rely only on your credit score to determine if you’re approved. Even if you have bad credit, you may still be able to get a short-term loan.
Elizabeth Barry is Finder's global fintech editor. She has written about finance for over six years and has been featured in a range of publications and media including Seven News, the ABC, Mamamia, Dynamic Business and Financy. Elizabeth has a Bachelor of Communications and a Master of Creative Writing from the University of Technology Sydney. In 2017, she received the Highly Commended award for Best New Journalist at the IT Journalism Awards. Elizabeth's passion is writing about innovations in financial services (which has surprised her more than anyone else).
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