Is everything really bigger in Texas? Find out how much you can borrow in the Lone Star State.
If you need money fast, you might be thinking about taking out a payday loan. To make sure you’re working with a legit lender, it’s important to understand how Texas legally protects borrowers before you accept any offers. Read through this guide to learn the ins and outs of payday lending in Texas and find financing that works for you.
Can I get a payday loan in Texas?
Yes. Texas doesn’t limit the amount of money you can borrow, but it does regulate how long you can take to pay it back. Here’s how it breaks down.
- Loans of $100 or less: You have a maximum of one month per $10, up to six months to pay it back.
- More than $100: You have a maximum of one month per $20 to pay it back.
So, a loan of $100 and a loan of $122 would both with a maximum term of six months.
Even though there isn’t a set limit to how much you can borrow in Texas, keep in mind the more you borrow, the more your loan will end up costing. Only take out as much as you can afford, and be sure you budget for the high cost of the loan.
Here’s a list of short-term loans in Texas
Check the websites of any providers you’re interested in to confirm they operate in Texas.
More regulation details
Texas state regulations
Texas regulates payday and short-term lending with a number of different laws, the main one being Texas Financial Code Ann. §§342.251 et seq.. This law applies to online and storefront loan providers. Its two main takeaways:
- All lenders must be licensed
- All lenders must clearly state how much you can borrow and how long you have to pay it back before you sign your loan documents.
If you can’t tell if your lender is licensed or it doesn’t give you clear terms for your loan, you might want to look elsewhere.
Texas city regulations
Several cities in Texas noticed the credit access business loophole and had have passed local ordinances regulating them. In these cities, any loan you get through a credit access bureau must meet the following standards:
- Payday loans can’t be more than 20% of the customer’s monthly income before taxes.
- Auto title loans can’t be more than 3% of their yearly income before taxes or 70% of the car’s value, whichever is less.
- Installment loans are limited to four repayments, with each covering at least 25% of the principal amount.
- Installment loans can’t be renewed or refinanced.
- Payday loans can only be renewed or refinanced three times.
- Any payday loan taken out seven days after a previous payday loan counts as a renewal or refinancing.
- If you refinance a payday loan, 25% of the new loan needs to go toward paying off your last loan’s principal.
Your credit access bureaus also must provide borrowers with the following information:
- A written agreement detailing the terms of the loan in the customer’s language of choice.
- References to nonprofit credit counseling agencies each time a customer renews a loan.
Some cities also have additional regulations, like requiring credit access bureaus to be registered within the city limits and to keep records of borrower’s proof of income on hand for three years.
Cities that regulate credit access bureaus
- Balcones Heights
- Cedar Hill
- College Station
- Corpus Christi
- El Paso
- Flower Mound
- Grand Prairie
- Harker Heights
- San Angelo
- San Antonio
- South Houston
- Sulphur Springs
- Universal City
- West University Place
How much does a payday loan in Texas cost?
Texas law doesn’t specify a maximum financing fee, and the typical APR is more than 400% per loan. You should read your contract carefully before signing because it lists all the possible fees you’ll have to pay.
Texas law regulates how much a lender can charge you for taking out a short-term loan. Like with loan terms, fees vary by the amount you borrow.
- Less than $30. $1 for each $5 borrowed
- $31 to $100. 10% of the amount borrowed and a handling charge of $3/month for loans less than $35, $3.50/month for loans between $36 to $70 and $4/month for loans between $71 a $100
- More than $100. $10 and a handling charge of $4 per $100 borrowed
If you’re late on a payment or miss one entirely, you’ll have to pay a late fee of either 5% of the payment or $7.50. If you don’t have enough money in your account, lenders are allowed to charge for filing fees and a $30 non-sufficient funds (NSF) fee.
What's a credit access business?
You may have noticed that some short-term loan providers refer to themselves as “credit access businesses,” rather than payday lenders. Credit access businesses are third parties that connect borrowers with payday lenders. The state of Texas regulates credit access bureaus, but not payday lenders.
Credit access businesses might make finding a payday loan easier, but it’ll cost you more. That’s because on top of the standard fees and interest the payday lender charges you, many credit access businesses charge a fee for their services as well.
If you need help finding a payday loan that works for you, you might want to consider using a connection service that doesn’t charge fees instead.
Our top picks for Texas short-term loans
These providers are our top choices for getting a short-term loan loan in Texas directly from a lender. They offer installment loans, a type of short-term loan that you pay back over a period of time in fixed repayments on the amount you borrowed, interest and fees. APRs are typically lower than your traditional payday loan, which you pay back all at once when you get your next paycheck.
This lender offers installment loans that start slightly larger than your average Texas payday loan. However, APR ranges can be much lower than what many other short-term lenders offer. It also reports your repayments to credit bureaus, so this short-term loan can actually help you build your credit score
- Loan amounts: $1,000 to $10,000
- APR: 34%–155% (Varies by state)
- Loan term: 0.50 year to 5 years
- How long it takes: 1-3 business days
- Eligibility: Must be 18+ years old, a legal resident of the US and have a Social Security number. Minimum credit score of 550.
Blue Trust Loans
Also a tribal lender, Blue Trust Loans offers small-dollar loans that you can pay off over up to 6 months. You can find out if you’re approved in just a few minutes by filling out a quick online application. And like MaxLend, Blue Trust Loans doesn’t charge prepayment penalties.
- Loan amounts: $100 to $2,000
- APR: Starting at 471.7846%
- Loan term: Up to 6 months
- How long it takes: As soon as next business day
- Eligibility: Must be at least 18 years old and have a verifiable source of income with direct deposit into your checking account.
This tribal lender offers quick funding up to $1,000 if it’s your first time borrowing and up to $2,000 if you’re a returning customer. You can quickly apply online and don’t need great credit to get approved. And if you want to pay your loan early to save on interest, there’s no penalty.
- Loan amounts: Up to $2,000
- APR: Starting at 471.7846%
- Loan term: 0.50 year
- How long it takes: As soon as the next business day
- Eligibility: Must be at least 18 years old and a US citizen, have a valid bank account and provide a verifiable source of income.
What do I need to apply for a payday loan in Texas?
Lenders will require you to be at least 18 years old, have a regular source of income and be a citizen or permanent resident of the US in order to apply. If you meet these minimal criteria, you can begin your application.
Although all applications differ, lenders usually want you so supply personal information about yourself, your bank account and your current employment status. This includes your Social Security number and access to your checking account if you’re applying online. If you have all the application materials close by, the process should take no more than fifteen minutes to complete.
How to find a legit Texas payday lender
Texas doesn’t have as many regulations as some other states, so finding a lender operating legally isn’t as difficult. But that doesn’t mean there aren’t lenders out there that aren’t totally kosher.
Check if it’s licensed
The best way to tell if your lender is legit is to check if it’s licensed. If your lender charges more than 10% APR and issues loans under $2,500, it must be licensed with the Texas Office of Consumer Credit Commissioner (OCCC). You can check this by asking your lender or visiting the OCCC website.
Look for complaints
While you’re on the OCCC website, you might want to check if your lender has any unresolved complaints against it that raise any red flags. You can also check for legal actions against the lender by visiting the Texas attorney general’s website and both on its Better Business Bureau (BBB) page.
Pay attention to fees
Another way to make sure lender is operating legally is by making sure that they aren’t charging any extra fees for the amount you’re borrowing. If you’re applying for your loan through a credit access business, however, you could end up paying extra fees and it’d be totally legal.
In fact, it can be hard to tell if your lender is legit when using a credit access business. As we mentioned before, credit access businesses aren’t required to get licenses and can charge additional fees. You’ll need to check with the actual lender that’s providing your loan to make sure it’s legit. Not sure who that is? Ask the credit access business.
What to avoid with a Texas payday loan
Just because your lender is legit doesn’t mean that you might not end up walking away with a raw deal. Try to avoid taking advantage of these features that are technically legal but can land you in a cycle of debt.
- Rolling over your loan. Rolling over your loan involves taking out a new loan to pay off your payday loan. You’ll get more time to pay it back, but the costs can quickly add up and make it difficult for you to afford to pay it off.
- Multiple loans at once. It’s perfectly legal to take out more than one payday loan in Texas, but that doesn’t mean it’s a good idea. With such high APRs, Texas payday loans can be expensive and paying off more than one at a time can up your risk of defaulting.
How to file a complaint against a Texas payday lender
If you believe you’re the victim of an illegitimate payday loan, you might want to file a complaint against your lender. Texas requires you to try to resolve the issue with your lender first without involving the government. If that fails, you have two options.
File a complaint with the Office of Consumer Credit Commissioner (OCCC)
The first place you might want to go is the OCCC. It regulates businesses that offer payday and auto title loans and can intervene if you have a case.
To file a complaint, go to the OCCC website and complete the complaint form either online or by downloading it and mailing it in. Keep in mind that your complaint will be a part of public record and the OCCC can’t intervene if you’re involved in a lawsuit.
File a complaint with the Texas attorney general
You can also file a complaint with the Texas attorney general’s office. The process is similar to the OCCC complaint — you can either fill out a form online or mail it in. You might be required to provide documentation backing up your claim.
Texas payday loan facts
Here’s a snapshot of what payday loans look like in Texas:
- Texans paid a total of $1,240,697,118 in payday loan fees in 2016
- The average payday loan is $470
- The average payday loan fee is $22.85 per $100
- The average APR on a Texas payday loan is 439%
- About 8% of Texans have taken out a payday loan, 3% more than the national average
- There are twice as many payday lenders in Texas than McDonald’s
Are there other alternatives to payday loans?
Although Texas does have some payday loan regulations, it doesn’t do as much as some other states to protect borrowers. If you think you might need to take out multiple payday loans in the near future, consider other options first.
Local banks and credit unions
Some banks and credit unions often offer short-term loans at much lower interest rates than payday lenders. Keep an eye out for credit builder loans. These typically come in small amounts but often have longer terms than payday loans and therefore more manageable repayments. On top of this, your lender will report all ontime repayments to credit bureaus to help boost your credit score — payday lenders don’t.
Texas has several assistance programs to help residents who are struggling to cover daily expenses. You can apply for these services for help with your regular bills while you work on paying down your debt.
- North Texas Food Bank (NTFB). This program offers nutritious food to Texas residents in need, as well as food education programs.
- Texas Medicaid Program. Low-income residents can also apply for Medicaid to get access to low-cost medical care.
- Temporary Assistance for Needy Families (TANF). If your family just needs cash to pay the bills, this program also offers financial assistance.
- Supplemental Nutrition Assistance Program (SNAP). Formerly known as food stamps, this program gives struggling families financial assistance to buy groceries.
If you’re caught in a cycle of debt or are struggling to pay your bills, you might want to consider enrolling in a credit counseling program. These programs are run by nonprofit organizations that can help you with budgeting and create a plan to get out of debt. You can find a government-approved credit counseling near you agency by visiting the Department of Justice’s website.
Payday loan laws in Texas can be confusing, but they can be useful when you’re stuck trying to pay for an emergency expense. Be sure you read your entire loan contract to avoid falling into a debt trap, and before you borrow, consider all your other options first.