Texas

Texas payday loan laws were first enacted in June of 2000. As with other states, Texas payday loan laws state that a lender must obtain a license before they operate. Under Texas state law, a company that engages in the business of payday loans is defined as any person(s) making cash advances in exchange for a consumer’s personal check, or in exchange fore the consumer’s authorization to debit the consumer’s deposit account. The licensing laws for payday loan lenders in Texas are the same as stated under the Texas Finance Code Ann. 342. Texas payday loan laws have different requirements on fees than other states. Under Texas law a lender is allowed to charge no more than $1 per $5 that’s borrowed for loans under $30. For loans over $30 but no more than $100, a service fee of one-tenth the amount can be applied. And for cash advances over $100, a fee of no more than $10 can be charged.

Texas payday loan laws also permit handling charges in addition to service or interest fees. Under Texas law, a $3.50 handling charge can be added each month to the total amount as long as the amount of the loan doesn’t exceed $35. If the cash advance is over $35 but no more than $70, monthly handling charge of $4 can be applied. For loans over that amount, a $4 fee can be added each month for every $100 that’s borrowed.

Payday loan lenders in Texas must post a notice with a fee schedule along with a written agreement. The agreement must contain the name of the lender, the transaction date, the amount of the check, an itemization of fees, the earliest date the check must be deposited, and a total amount expressed in U.S. dollars and as an annual percentage rate. The agreement form should have the name, address, and phone number of the Consumer Credit Commissioner. Texas payday loan laws also require that the agreement form provide a notice that sates payday loans are intended for short-term cash needs.

Texas payday loan laws prohibit lenders from dividing one loan into two loans for the sole purpose of collecting higher interest fees. The maximum term limit for payday loans in Texas is 31 days. The minimal term limit for payday loans is 7 days.

Under Texas law, a lender cannot pursue criminal charges to collect on a debt. Also, a payday loan lender is limited as to how many times a loan can be renewed. Currently under Texas law, lenders are allowed to renew a payday loan one time each month.