Short term loans fall into a variety of typical categories from checking advances, personal loans or title loans. The loan can be set to be paid in a matter of weeks or even month but must be paid all at once along with the fees associated.
If the consumer cannot pay, there is the option to only pay the fees and interest and “rollover” the principal for up 4 renewal periods. Loans of this type carry a much higher rate of interest and can vary from 240% to 12% depending on the principal loan amount. Currently, thirty eight states have passed legislation for short term loans, with Texas being the least regulated. The last year has brought many changes though.
Tex. Fin. Code Ann. §341 gives the Office of Consumer Credit Commissioners the ability to regulate all matters concerning short term loans in Texas.
Tex. Fin. Code Ann. §341 gives the Office of Consumer Credit Commissioners the ability to regulate matters concerning short term loans in Texas. In Texas, there are fewer regulations on short terms loans, which leads to a higher profit margin than national average for companies that provide the service.
Tex. Fin. Code Ann. §342.251 et seq. and 2013 Chapter 784 governs the actual length of the loan and what the interest charges may amount to depending on the original amount of the loan.
Tex. Fin. Code Ann. §393.221 et seq. and §393.604 et seq. states what schedule fees may be assessed and that all fees must be disclosed. It also addresses special circumstances for military personnel.
7 Tex. Admin. Code §83.6004 and §83.1001 et seq. states that the interest may not be more then the state maximum sent by Texas Finance Code, §342.251 – 342.259, which is currently set by the Office of Consumer Credit Commissioners and to be no more than $1,042. It further explains that the loan length may not be less than seven days.
In addition, several Texas state house bills were introduced, passed and enacted in 2013 allowing for a more regulated marketplace. These bills gave supply a safety net for consumers on the length of renewal, maximum interest rates, deny compound interest and address many issues within the marketplace. H.B. 2315 and S.B. 1251 (maximum loan amounts, denies compound interest, S.B. 1247 (regarding extensions and civil penalty for non compliance), H.B. 3019 (extensions to military personnel and spouses), H.B. 3461 (pertains to partial payments and credit acquisition for consumers) S.B. 823 (authorized repossessions and delinquency charges), S.B. 998 (partial payments),H.B. 1715 (limitations on renewal), H.B. (requiring legal notices and disclosures) 401 (S.B. 1000, S.B. 1689, S.B. 1714, and S.B. 1716 are just a few Texas laws for short terms loans.