Can you imagine taking out a $500 loan and it costing more than $1100 to pay back?
FACT: Every day in our area, many of our neighbors are doing just that and paying up to 484% in interest and fees on small, short-term “payday” loans.
This is completely legal in our state, and as a result, payday and auto-title lenders are making billions of dollars while preying upon people in dire need of financial help to pay their rent, to feed their children, and to fix their car so that they can get to work.
FACT: According to Texas Appleseed, in the Fort Worth-Arlington area, 105 cars are repossessed per week as a result of auto-title loans.
That’s nearly 5,500 cars per year and an equal number of families, single parents, senior citizens, and others who may permanently lose their vehicle for being late on one payment, sometimes by a matter of minutes, even though they’ve been paying back a 300% interest loan on time for months.
FACT: Due to inaction by the state legislature to regulate these predatory lenders, many cities have passed meaningful reforms to protect their citizens.
To date, 26 Texas cities, including Dallas, San Antonio, Houston, Austin, Corpus Christi, Amarillo, El Paso, Flower Mound, and Denton, have passed ordinances limiting loan amounts and the number of times a loan may be rolled over. Right now, Arlington is considering becoming the first Tarrant County city to add their name to this list.
FACT: There are several things that you can do to help be a part of the solution.
First, if you or someone you know has been a victim of predatory lending, let us know. Call my office at 817-459-2800 or click here to send me an email. We want to know how these loans are personally impacting Texans and trapping people in a cycle of debt.
Second, if you live in a city not on this list contact your local leaders and ask them to support a payday lending ordinance in your community.
Third, make your voice heard on this issue. Write a letter to the editor, call your legislator, tell your friends. This is a serious issue, the impact of which goes far beyond those who take out the loans. In fact, the Texas Catholic Conference has estimated that 30% of charitable assistance goes to help those in trouble with payday or auto-title loans and that predatory lending has a negative economic impact of $87,578,234 in the Fort Worth/Arlington area alone.
FACT: Federal regulations are being proposed, but they will not fully address the problem.
Next month, the Consumer Financial Protection Bureau (CFPB), the federal agency with oversight over predatory lenders, is expected to release new proposed regulations. These rules have become a common talking point among those who are opposed to state or local regulation — they often point to impending action by the federal government as a reason not to pass state or local laws.
Prominent organizations across our state, like the Texas Catholic Conference, the Baptist General Convention’s Christian Life Commission, and Texas Appleseed, agree that these rules will not replace local ordinances, but serve to complement these existing laws.
It’s also critical to point out that the timeline for implementation of federal rules is unclear. My office has been in contact with the CFPB and has been told that it will like take about two years for rules to go into effect; this of course assumes that implementation is not halted by industry lawsuits or a new administration.
Predatory lending is an issue that impacts us all. Even if you have never taken out a loan, somewhere down the line, through the need for more charitable contributions or as a result of the strain on local economies, you’re going to pay a price. It’s time we help our neighbors and time we act on their behalf.
Please, tell us your story, contact your elected officials, or write a letter to the editor. Whatever you do, don’t sit on the sidelines and let these predatory lenders trap more of our neighbors in a never-ending cycle of debt.
P.S. If you’d like to join our Texas 101 Payday Lending Task Force, click here.