General Information

About This Guide

This guide was created to provide information about payday lending, auto-title loans, and other short-term loans. It includes links to relevant Texas and local laws, resources and information explained in "plain English", and links to studies on payday and auto-title loans.

A payday loan (also called a cash-advance loan, a check-advance loan, a post-dated check loan, or a deferred deposit loan) is a short-term, high-interest loan from a check cashing business or a finance company. These loans are often cash advances secured by personal checks or electronic transfers, and often have very high annual percentage rates (APR).

Texas Laws and Regulations

Below you will find references to the Texas laws that govern payday loans. If you find these statutes difficult to understand, you may want to look at the "plain English" resources on this page or speak to an attorney.

Texas Finance Code ch. 393, "Credit Services Organizations"
Many but not all businesses offering payday loans are regulated by this chapter. Credit services organizations are sometimes referred to as CSOs.
7 TAC 83 subchapter B, "Rules for Credit Access Businesses"
The Office of Consumer Credit Commissioner's regulations regarding credit access businesses.
Office of Consumer Credit Commissioner, Credit Access Business resources
This portal for credit access businesses links to primary law as well as agency advisory letters, reporting requirements, and required licensing forms.

Local Regulations

Several cities in Texas have passed ordinances related to the payday lending industry. Below are resources related to local regulation; however, this list may not be comprehensive. For assistance with searching your city's ordinances, please visit Municipal Laws and Ordinances.

Payday Lending Clearinghouse
This webpage from the Texas Municipal League covers recent changes in local regulation of payday lenders. It provides access to news updates, lawsuit pleadings, relevant reports, and sample ordinance language.
Austin Code of Ordinances
Ch. 4-12 "Registration of Credit Access Businesses," effective 1/1/2012.
Balcones Heights Ordinances, Ch.121: Credit Services Businesses
This chapter enables monitoring of credit access businesses in an effort to reduce abusive and predatory lending practices. It was added by Balcones Heights Ordinance 2013-11 with the effective date of 8/1/2013.
Dallas Code of Ordinances
Ch. 50, Art. XI "Credit Access Business," effective 1/1/2012
Ch. 51A, Art. IV "Zoning Regulations". Several sections of this chapter were amended by an ordinance which created a new alternative financial establishment use, Ordinance no. 28214 [PDF].
Denton, Ordinance 2013-073 [PDF]
This ordinance has not yet been codified, but pertains to credit access businesses and was effective 4/8/2013.
El Paso Code of Ordinances
Ch. 5-17, "Credit Access Businesses," effective 1/8/2013.
Houston Code of Ordinances
Ch. 28, Art. XV, Div. 1, "Credit Access Businesses," effective 7/1/2014.
San Antonio Code of Ordinances
Ch. 16, Art. 16 "Credit Access Business," effective 1/1/13.

Explained in "Plain English"

Because Texas and federal law may not be easy to understand, below you'll find a collection of resources that help to explain the law in "plain English."

Credit, Loans and Debt
Federal Trade Commission consumer information page provides information about car title loans, payday loans, and cash advances.
FAQ - Texas Fair Lending Alliance
This organization's webpage provides answers to frequently asked questions about payday loans. See their main site for links to news updates about payday lending as well as resources for borrowers and a place to share your story.
Fast Cash: How Taking Out a Payday Loan Could Land You in Jail
This 2013 article from the Texas Observer covers when a payday lending company may be able to file criminal charges against a borrower who is in default.
Payday Loans Questions and Answers
The Consumer Financial Protection Bureau provides FAQ pages on payday loans and other consumer issues.
Report: Texas Payday Lenders and Prosecutors Team Up to Criminally Pursue Borrowers
A 2014 follow-up to the Texas Observer's 2013 article on payday loans and criminal prosecutions. This article reports on a new study from Texas Appleseed.
Repossession - Vehicle or Property
This page from TexasLawHelp describes when your vehicle could be repossessed due to nonpayment of a debt, your rights in this situation, and what to do if your vehicle is repossessed.

Studies on Payday and Auto Title Loans

As a hot consumer topic, payday loans are being researched by a variety of groups. Some of those studies are linked here. They provide interesting insight and statistical analysis.

The State of Lending in America and its Impact on U.S. Households [PDF]
This July 2013 study from the Center for Responsible Lending examines issues surrounding car title and other "asset-based lending" practices nationwide. The report discusses current legislation and offers policy recommendations.
The Case for Payday and Auto Title Loan Reform: Texans Tell Personal Stories. Local Governments Take Action. Experts Weigh In. [PDF]
This 2011 report from Texas Faith for Fair Lending focuses primarily on personal stories related to payday lending.
Driven to Disaster: Car-Title Lending and Its Impact on Consumers [PDF]
This February 2013 study, written by the Consumer Federation of America and the Center for Responsible Lending, provides an overview of the state of car title lending in the U.S. The authors describe the structure of car-title loans, estimate of the size of the national car-title loan market, discuss the typical borrower’s experience, and provide state and national policy recommendations.
Family Budget Busters: Payday and Auto Title Loans Are Getting More Expensive for Texans
- This link opens in a new window
Issued May 20, 2014, this study by the Center for Public Policy Priorities, "shows Texans paid more in payday and auto title loan fees in 2013
compared to 2012 and remained in debt longer, even though they took out fewer total loans
during that same time"
The Military Lending Act Five Years Later: Impact On Servicemembers, the High-Cost Small Dollar Loan Market, and the Campaign against Predatory Lending [PDF]
This article written by Jean Ann Fox of the Consumer Federation of America, May 29, 2012 looks at the special impact these loans have on the military.
Payday and Auto Title Lending in Texas market overview and trends 2012 - 2015
Texas Appleseed White Paper examining payday and auto title lending in Texas.
Payday Lending Statutes
This National Conference of State Legislature resource "summarizes state statutes regarding payday lending or deferred presentment, which features single-payment, short-term loans based on personal checks held for future deposit or on electronic access to personal checking accounts."
Payday Loans and Deposit Advance Products [PDF]
Per the introduction," the Consumer Financial Protection Bureau (CFPB) has engaged in an in-depth review of short-term small dollar loans, specifically payday loans extended by nondepository institutions and deposit advance products offered by a small, but growing, number of depository institutions to their deposit account customers."
Pew Charitable Trusts' Safe Small-Dollar Loans Research Project
The Pew Charitable Trusts' Safe Small-Dollar Loans Research Project focuses on small-dollar credit products such as payday and automobile title loans, as well as emerging alternatives. The project works to find safe and transparent solutions to meet consumers’ immediate financial needs. This webpage serves as a clearinghouse to Pew reports and other resources on this topic.
Short-term Cash, Long-term Debt: The Impact of Unregulated Lending in Texas [PDF]
In this 2011 study, the Texas Appleseed Project partnered with the Texas Alliance for Economic Inclusion to survey low- and moderate-income consumers on their short-term borrowing practices. The aim of the report is provide information to policymakers so that they can understand and address short-term lending needs fairly.

Payday Loans