The City of Dallas has joined the hundreds of cities around the country who are standing up to payday loan companies and saying enough is enough. The City Council voted last week to implement new tough rules governing payday loan companies in the city.Below are a few of the new rules:
- Payday loan companies are restricted from lending customers more than they can afford to repay. The city will base the maximum loan amount on the borrower’s income.
- Payday loan companies are now required to register with the City of Dallas so that they can be tracked and monitored.
- Payday loan companies and title loan companies are now required to keep books on every loan they issue. This record keeping requirement will take effect in January.
- Payday loan companies are now required to use part of every customer payment to pay down the principal of the loan. Many payday loan borrowers have complained bitterly about the fact that some payments would only go to fees which seemed to pile up over time.
The City of Dallas already has restrictions on how many payday loan companies can exist in any given neighborhood; but more needs to be done to offer alternatives to low-income residents who feel they have no choice but to take out these loans. Right now, city officials are talking to area banks and credit unions to see if they can provide lower cost short-term loans as alternatives; but many traditional lenders are shying away from the high-risk demographic.