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When you have unplanned expenses and are on a tight budget, a payday loan could be helpful. Payday loans, a type of short-term loan, give you quick access to money when you need it. Read on to find out about the laws in Texas and everything else you should know about how payday advances work.
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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.
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.
So, a loan of $100 and a loan of $122 would both have 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 learn how to budget for the high cost of the loan.
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.
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.
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:
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.
Several cities in Texas noticed the credit access business loophole and have passed local ordinances regulating them. In these cities, any loan you get through a credit access bureau must meet the following standards:
Your credit access bureaus also must provide borrowers with the following information:
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.
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.
These providers are our top choices for getting a short-term 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
Also a tribal lender, Blue Trust Loans offers small-dollar loans that you can pay off over up to 9 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.
Read our review of Blue Trust Loans installment loans
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.
Read our review of MaxLend installment loans
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.
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.
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.
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.
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.
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.
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.
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.
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.
Here’s a snapshot of what payday loans look like in Texas:
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.
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 on-time 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.
Learn more about payday loan alternatives by state
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 government-approved credit counseling near you 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.
Can I get a payday loan in Texas if I don’t have a job?
It depends. Most payday lenders require you to have a steady income to qualify for a loan. If you’re living off a pension, social security, disability or other government benefits, however, you might be able to qualify for a short-term loan because many lenders consider this regular income. If you don’t have any money regularly coming in, however, you might have more difficulty finding a legitimate lender you can borrow from.
What if I can’t pay back my loan by the due date?
If you’re unable to pay the full amount, Texas law allows you to refinance your loan. The process varies depending on your lender but often comes with steep charges and keeps the amount of accrued interest. You may want to request a payment plan if you’re struggling to make the total payments.
You won’t be able to get a rollover if the maximum interest rate exceeds the renewal charge.
Can I have more than one payday loan at a time?
Yes. Texas allows for any number of loans to be taken out at once.
Is there a legally required cooling-off period between loans?
No. There is no cooling-off period in Texas, but you’ll want to limit the number of loans you take out to save money on interest costs.
Can a payday lender file a criminal complaint against me if I can’t pay back my loan?
Technically it can’t — Texas passed a law in 2012 specifically prohibiting lenders from filing criminal complaints against borrowers who can’t pay back their loan. It’s also against federal law. Unfortunately, this hasn’t stopped some payday lenders from filing criminal complaints against borrowers anyway in the past. If your lender files a criminal complaint against you, you might want to get legal council to help you handle the case.
Your lender can file a civil lawsuit against you if you’re unable to pay back my loan, however. If you don’t pay it back after getting a court order, you could end up in jail. Be careful where you borrow money from and make sure you work with a reputable lender.
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Can I get a payday loan in Aaustin, TX without a bank account?
Most payday lenders require borrowers to have an open or valid checking account because having one makes it easier for lenders to transfer the requested funds quickly. However, there are some lenders that don’t require a bank account although, this type of loan will likely cost you more than the average personal loan.
Before applying, please review the lender’s eligibility criteria as well as the loan terms to see if it suits your needs.
I hope this helps.
I am a 73 year old Army veteran rated at 100% disabled for PTSD, I receive a good income but my credit score is very low and all my income is deposited to a prepaid debit card, I need a short term loan due to family emergency, where can I turn to
Thanks for leaving a question on finder.
If you are a pensioner, whether it’s an employer retirement benefit or Social Security, you may find your loan options limited. Some companies may have stricter criteria for pensioners like you.
It’s important to know that there are still loan options for you. It’s even more important to know how to compare these options so you can choose the right loan. Check out our guide on pensioner loans to compare your options and find out how to apply.
company asking for upfront activation,insurance fees, is this not unusual when dealing with high risk borrowers(bad credit) ??
Thank you for contacting Finder.
Usually, lenders that offer bad credit loans, may require a collateral to secure the loan however, they do not usually ask for upfront fees.
Generally, loans demanding “activation,” “insurance” or even “origination” fees before approval are one of the warning signs of a personal loan scam so you should be wary of them. Before applying, make sure that the lender you are dealing with is legitimate.
I hope this helps.
Is it possible to be approved for a payday loan using a bluebird greendot card as my bank account?
Thank you for your inquiry.
With your loan options in Texas for payday loans. You must meet the following requirements to be eligible for this loan.
– You should be at least 18 years of age
– You should be an American citizen or a permanent resident of the US
– You should have a regular source of income
To complete your application successfully, prepare to submit some basic information:
– Your name, date of birth, social security number and a valid form of ID such as your driver’s license or passport
– Your residential address, email address and phone number
– Details about your employment and income
– If you’re applying online, details of your existing checking account
I hope this information has helped.