June 26, 2014

The Fine Print Behind Pay Day and Title Loan Companies

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Written by: Nydia O
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Jennifer Carr Allmon, associate director with the Texas Catholic Conference visited Brownsville on June third as part of a trip to listen and document stories from the local community about their experiences with Payday or Title Loan Companies.

Over 10.6 million dollars are drained from the Cameron County economy each year because of the excessive – and unregulated – fees charged by these loan companies. Installment loan borrowers pay about $140 in fees per $100 borrowed, and 420 cars were repossessed last year by auto title lenders in Cameron County.

What is a Payday or Auto Title Loan?  They are companies who provide small cash advances with high interest rates and no limit on managing fees. Payday loan companies are unsecured, but require postdated checks or electronic access to debit accounts as collateral. A car title serves as collateral for auto title loan companies, and loans typically extend for one month. If a borrower defaults, the company will take the car usually with no prior notice.  Furthermore, and as Carr Allmon explained, we are talking about 500% to 1,000% average percentage rates (APR). Fees on 4K auto title loans are over 1K per month, and payday loan fees are often paid month after month without reducing the loan amount. It is estimated that 64% of all loans in the Brownsville area are refinances. On average, Texans pay $22 per $100 borrowed because there is no regulation in our state.

These loan companies cripple our communities, and appallingly so, it is like the wild, wild west of lending, for under current state law there are no limits on fees, interest rates, the size of loans, rollovers or refinances, and no limits on the ability to repay based on income. The lack of regulation has also allowed for tremendous growth of these businesses especially in economically vulnerable areas of our state.

“We were surprised to find that a high percentage (75-80%) of residents of Cameron County have acquired Pay Day and or Title Loans – this  was much higher than we expected,” said Carr Allmon adding that she was very encouraged to see Brownsville’s leadership and desire to tackle and change this problem. Local United Way and Affordable Housing representatives see this problem first hand, and offer the Texas Catholic Conference all the resources and assistance needed in this effort. “All we need now is for the State Legislature to make the change.” Concluded Carr Allmon.

Catholic Bishops throughout the State of Texas have expressed their concern and are asking communities to step up and approve ordinances that protect the consumer. Cities like Dallas, Austin, San Antonio, Houston, and El Paso have already passed ordinances. Today, a total of 17 municipalities have enacted the model payday and auto title ordinance, but none of them in the Rio Grande Valley. Local leaders can spearhead alternative resources like the Community Loan Center founded in 1995 by six investing stockholder banks which cover the investment area of Cameron County. Their mission is to improve the economic conditions of people in the RGV by administering the Affordable Small Dollar Loan Program. Community leaders are encouraged to start the conversation with the clergy to asses client impact that will support local ordinances to be approved.


Filing personal complaints is extremely important, for our state leaders may not approve something lacking documented problems and or issues. People are encouraged to visit or the Texas Attorney General at or the Texas Office of Consumer Credit Commissioner

For more on the Community Loan Center visit



Alternatives to Pay Day and Title Loans:

*Family and friends

* Advances from employers

*Utility Assistance

* Payment Plan with Creditors

*Cash advance on credit cards

*Loans from licensed consumer lenders such as credit unions and banks

*For tools to build emergency savings visit

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About the Author

Nydia O
La Vida Valle is where I write about "la vida" my life in the Rio Grande Valley of Texas. I write about the food, the culture, the good times and the bad. I write about the people who make El Valle festive and laid back at the same time. Contributions and comments are always welcome .


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