There is no denying that not everyone has the kind of income stream required to meet all their wants. In too many instances, though, the income streams of many individuals in Texas aren’t sufficient to even meet all of their basic needs. That’s one of the arguments proponents make for raising the minimum wage.
Confronted with the challenges of trying to make it day to day, many people turn to alternative credit sources to try to make ends meet. Sometimes the door they go through leads to an operation that offers payday loans or loans against car titles. What often happens then is that an already struggling consumer gets trapped in a cycle of rolling over loans and exorbitant interest rates.
That is not the kind of debt relief that typically gets a person out of trouble.
But in the absence of regulations meant to control how such lenders operate, it’s a path people can find themselves going down, unless they consult first with an attorney.
As things currently stand, Texas is viewed as having some of the most lax regulations on payday and title lenders in the country. Interest rates of as much as 1,000 percent are not unheard of. There’s some talk that the legislature might attempt to pass a uniform regulatory measure for the state during next year’s session. Shy of that, 17 cities have passed their own ordinances.
Dallas is among them. And despite a challenge from the payday lending industry, the city has seen the law upheld in court. The latest decision came just last month when the Fifth Court of Appeals in Austin rejected industry claims that the ordinance blocks operators from doing business. The court said the city has only set the terms for doing business, which is its right.
A spokesman for the industry group says the question lenders are faced with now is deciding whether to appeal to the Texas Supreme Court. He says challenges to all the other ordinances are also likely.
Source: El Paso Times, “Appellate court rejects payday lenders’ suit against Dallas ordinance,” Marty Schladen, June 1, 2014