Create Reasonable Rate and Fee Charges and Loan Structures for Payday & Auto Title Loans and Maintain Existing State and Local Fair Lending Protections (2021 Legislative Priority)


In the first quarter of 2020, with the economy booming, car repossessions by auto title loan operations reached an all-time high — over 13,000 cars repossessed in one quarter. Fees for payday and auto title loans have also been trending up in Texas. These uncapped loans average 200% to 500% APR. In 2019, borrowers paid over $2 billion in fees for high-cost payday and auto title loans, with an average $500 loan costing $1,100 or more to repay over a few months. Reining in abusive lending practices in our state will help Texans to rebuild from the financial and economic harms of the pandemic.

Maintaining existing consumer credit protections in Texas law is also essential. In the 2019 legislative session, there were multiple attempts to preempt important local protections (40+ cities in Texas have strong ordinances that offer some protections), open new predatory lending loopholes, and raise rates for consumer loans in Texas. 

Families recovering from the financial hardship of the pandemic need access to fair credit. Holding payday and auto title loan businesses accountable to reasonable rate and fee charges and loan structures that do not pull borrowers into an ongoing cycle of debt and maintaining existing protections against high-cost lending are more important than ever. A fair baseline for lending practices in Texas will lead to a market that builds financial wellbeing and empowers economic recovery for Texans.

Fair Financial Services & the 87th Legislative Session

Texas Appleseed has four 2021 legislative policy initiatives as part of our Fair Financial Services Project; they include advocacy surrounding Debt Collection, Coerced Debt, Payday & Auto Title Lending, and Auto Insurance Pricing. All priorities can be found on our legislative page. These priorities focus on policies that enhance the ability of Texas families to recover and rebuild from the economic harms of the pandemic. The U.S. Census and other survey data show that 40 to 50% of Texans continue to experience increased economic hardship due to the pandemic. 

Before the pandemic hit, when unemployment was low, Texans were already experiencing record indebtedness, record debt collection lawsuit filings, and high fees and auto repossessions related to payday and auto title loans. The pandemic has deepened the financial harms that Texans are experiencing from these trends in our economy. Black and Latino Texans are particularly struggling under the weight of these dynamics that undermine financial wellbeing.

Building on our ongoing systemic reform efforts, these priorities will make a meaningful financial difference for Texans harmed by the pandemic, and will help Texans families to rebuild in its wake.

Project Association: 
Payday & Auto Title Lending Reform