Payday Loan Rules in Texas (TX) – Get the Facts Right
People turn to payday loans when there is a need for emergency cash. It helps them to cover up the financial expenses until their next paycheck. These short term loans have helped thousands of Americans meet their financial obligations. The loans can become a secure source of funding once individuals fully know the workings and risks attached with this kind of loan. It can help individuals to meet short term financial emergency expenses.
Regulations regarding payday loans differ in the US. All the states have prescribed different regulations apropos these short term loans. Let’s take a brief look at the payday loans in the state of Texas, TX. Note that these loans all applicable for all loans that are similar in working and structure to payday loans including salary loan, payday advance, payroll loan, small dollar loans and others.
The State of Texas has enacted different regulations regarding the payday loans that are different in many aspects for rules in other states. Payday loans in the state are specified in Tex. Fin. Code Ann.:
- §342.251 et seq.,
- §342.601 et seq.,§393.221 et seq.,
- §393.604 et seq.,
- and Tex. Admin. Code §83.6004 and §83.1001 et seq.
One of the rules regarding payday loans in Texas is that the borrowers should be made aware about the terms and conditions attached with the short term loan. The lender should explain to the borrower about the fees, rates, charges, and how they would accumulate over time. This will ensure that the borrower does not feel any difficulty after obtaining the loan.
Another rule regarding payday loans is about the maximum amount that the lenders are allowed to issue to the borrower. Lenders in the State of Texas are not allowed to lend above $1,800 at any given time. In addition, they are also not allowed to issue multiple loans if the combined amount of the loan exceeds $1,800.
Although there is a limit regarding the amount that the lender can give out as loan to the borrower, the law does not put any restraints on the lender regarding the fees and other charges regarding the payday loans. The lenders are at liberty to charge any amount that they feel is appropriate from the borrower.
In the State of Texas, lenders are not allowed to take the borrower to a criminal court in case of a default. If the borrower defaults on a loan they would not be subject to criminal prosecution even if they purposefully default on the loan. That being said, payday loan lenders can take the matter in the civil court. The lenders can pursue case against the defaulted borrower in the civil court and even force them into bankruptcy.
Individuals are advised to seek expert financial help to know complete details about the payday loans. Knowing about the laws regarding payday loans is the first step to ensure that you don’t fall into any debt hole when applying for these short term loans.