House Bill 2592 and House Bill 2594 governing payday loan and car title lenders passed last week giving consumers more protection. House Bill 2592 requires more noticeable disclosures regarding fees and interest rates. House Bill 2594 requires both payday loan and car title lenders to be licensed and regulated by the state.
The good news for Texas debtors is that they will be able to check with the state to make sure a company is actually licensed before their take out a payday loan or title loan. They will also have an opportunity to find out the true cost of the loan before they commit. Many people in debt using a payday loan have been shocked by the real costs associated with the loans. Also, many Texas debtors did not fully understand how loan costs could balloon quickly if they did not pay the loan off quickly. But even with the new rules which are scheduled to go into effect in January 2012, debtors should use caution before taking out any payday loan or title loan. Below are a few tips:
- Try to avoid online payday loan or title loan lenders. While they may claim to serve Texas debtors, if they are not physically located in the state, they may not adhere to state rules and they will not be licensed in the state.
- If you do decide to take out a payday loan or title loan, pay off the loan quickly. If you need to extend your repayment period, the costs can skyrocket.
- Never pay for payday loan or title loan fees upfront. Any lender asking for you to pay loan fees first (before you actually receive the loan) is probably running some type of scam.