The payday lending industry is a booming business in Texas, with an average of 8 percent of the state’s residents relying on short-term loans to stay afloat financially. Perhaps because payday loans are among the most expensive short-term loans available, they are relatively easy to secure compared to more conventional alternatives.
Recent legislation passed in Texas allows individual cities to enact their own payday loan restrictions. If you are a resident of San Antonio, you may be subject to certain limitations and regulations when applying for a cash advance. Here are the seven things you should know about San Antonio payday loans to make you a more informed consumer and responsible borrower.
1. Third-Party Lending – In the state of Texas, payday loan services operate as credit service organizations (CSO) or credit access businesses (CAB). They are not lenders and do not make loans. Rather, these CSOs assist consumers in obtaining a short-term loan through a non-affiliated, third-party lender. Most San Antonio payday loan services work with a variety of lenders and will match you with a lender offering you the most favorable loan term and rates.
2. State Approval – Any storefront offering payday loans is required to register with the secretary of state and obtain a license from the Office of the Consumer Credit Commissioner. Legitimate cash advance services post their licenses (as well as fee disclosures) on their websites and in stores.
3. CSO/CAB Fee – It’s also important to know that CSOs charge a service fee on every loan they issue, known as the CSO or CAB fee. It is a percentage of the total loan amount you borrow and typically ranges between $15 and $30 per $100 you borrow.
4. Mandatory Cooling-Off Period – The city of San Antonio has a mandatory cooling-off period for all payday loan borrowers. This means once you repay a short-term loan in full, you are required to wait a minimum of seven days to apply for another one. Some CSOs may require a longer cooling-off period.
5. Texas Is a Permissive State – Texas is currently a permissive state, meaning there is little legislation delimiting the fees and interest rates CSOs and lenders can charge. However, new, tougher regulations are being enacted to curb usurious lending practices. Before finalizing a payday loan in San Antonio, be sure you understand what fees in addition to the loan principle you will be responsible to pay.
6. Loan Rescind – In the city of San Antonio, you have the right to cancel a payday loan without penalty or charge within three days of signing for the loan. You will be required to return the full loan amount and some CSOs require you to fill out a notice of cancellation.
7. Loan Renewal – If you are unable to repay your loan in full on your due date, many CSOs give you the option to extend or refinance your loans up to four times. If you choose to extend, you will be charged the CSO fee and interest on the original due date, and the principal loan balance plus additional fees on the extended due date. If you are still unable to repay the loan in full after four extensions, you may be eligible for an extended payment plan.
Payday loans can constitute a viable source of income if you are struggling to pay bills or grappling with unexpected expenses. However, all too often they become a debt trap that becomes increasingly difficult to escape. If a payday loan is your last result to weather a financial emergency, be sure you fully comprehend how they work before you finalize a loan.
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