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Texas Payday Loans

The time has come for Texas state law makers to fix the growing problem associated with payday loans. Too many people in Texas are drowning in debt and many are finding that payday loans are making it worse.

Payday loans in Texas operate in a legal grey area that is largely unregulated. By operating as a credit services organization, providers of payday loans can use loopholes in the laws to charge consumers outrageous fees and interest rates.

Many of the payday loans offered in Texas can have interest rates in excess of five hundred percent. Mostly because providers of payday loans in the state are not governed by the Office of Consumer Credit.

The Office of Consumer Credit Commissioner was established to protect consumers by regulating the licensing of lenders and enforcement of state laws governing lending, but credit services organizations are able to bypass the Office entirely. Without any regulation or enforcement many consumers have nowhere to turn for legal protection or help.

In the last few years the growth of credit services organizations has exploded. The reason for this explosion in growth has everything to do with how other states are dealing with this problem.

The 2005 it was estimated that there was less than 100 credit services organizations in the state of Texas, but now there are more than 400. This growth can be attributed to other states passing laws that restrict the amount of interest that can be charged to consumers obtaining payday loans. Many of the companies providing payday loans simply moved to Texas to avoid another state’s laws.

One such Texas based credit services organization recently posted earnings revenue to the staggering sum of one billion dollars annually. How does a company that provides small payday loans make a profit like this when the economy is in recession? The answer is simple: By taking advantage of the people of Texas that can least afford the unfair fees and do not have many places to turn for help.

People in Texas should be very cautious when taking out payday loans, because there is no place for people to turn if they get trapped into one of these unfair loans. Hopefully for the residents of Texas something will be done soon, either on a state level or with some action in congress. But until then, payday loans in Texas should be a loan of last resort, if at all.