San Antonio, Texas payday loan lenders are facing possible regulations. Folks in San Antonio are lining up at City Hall showing support for the City Council's proposed ordinance to regulate direct payday loan lenders and auto title lenders. The council would like to regulate the amount of a payday advancve based on the applicant's income and an auto title loan would be based on the lesser of annual income and percentage of the vehicle's value. The regulations would also limit the number of installments on a loan and mandate that there is a minimum reduction on the loan with each payment.
Most online payday lenders will format their loan practices to incorporate the rules and regulations of the different states. If these new ordinances pass council, this city will join a few others who have already placed regulations on payday loan companies. Dallas and Austin already have regulations in place and the payday lenders have challenged these regulations in the court, yet they still remain intact.
These cities are doing what other states have already done in order to protect the residents. Too many borrowers fall into paycheck loan traps and fall further into debt trying to pay back the loan. The regulations do not help everyone nor do they solve people's problems. Payday loan lenders are access to fast cash which will get a person by to the next paycheck. The cause for the extra payments is not answered by a ow cost payday loan. These loans are low cost if paid off on time. Those who do not pay them off on the due date will experience a rise in the cost due to the high interest attached to the loans.
The city of San Antonio will be faced with decisions. Certain states have banned payday loans all together, but the city does not have the power to do so. The city does not recognize that the service provided by the payday loan lenders provides relief to those who need the fast cash at times.
If this new ordnance passes, cash advance lenders and auto title loan lenders in San Antonio will:
* Limit loans to 20% of the gross monthly income.
* Limit auto title loan lenders to 3% of the customer's gross annual income or 70% of the vehicle's worth.
* Limit recycled loans to four.
* Money from each payment will lower the principal by 25%
* Limit how many times lump sum repayment can be refinanced to 3.
* Lenders would have to register with the city, pay a licensing fee for each store location and make some business records available to the city.
* For those customers who do not read or write English, the lender must provide written documentation in the customer's language. In some instances, the document would be read aloud for the customer in whatever language they understand before any contract can be signed. Payday loan lenders will need to follow any regulation set in in place. They have the option to sue the city trying to get them changed, but until that happens, a resident would be in the best interest to only do business with lenders who follow regulations.
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