via The Waco Tribune: Alexis Christensen, guest commentator
Last week a group of consumer, civic and religious organizations including a few Waco residents went to Austin to speak to House and Senate committees on dubious lending practices by payday and auto-title lenders that cost Texas consumers an estimated $1.4 billion annually in fees.
The Texas Legislature held a hearing on HB 3047 authored by the senior-most member of the Legislature — Rep. Tom Craddick, R-Midland. This bill is supported by the Texas Fair Lending Alliance, a coalition of over 60 organizations and individuals working to transform the Texas payday and auto-title loan market. Communities of faith across the state also support it. The bill mirrors city ordinances already adopted by 22 Texas cities with common-sense limits to prevent the cycles of ongoing debt way too often caused by these loans under current Texas law.
Texas laws do not limit the fees payday and auto-title lenders can charge. There also is no limit to the number of times these businesses can charge high fees for essentially the very same loan. These lending practices often trap borrowers in endless debt where they’re unable to pay off the loan. City ordinances address this by limiting the size of loans based on income; requiring principal repayment with every payment; and limiting loan rollovers so borrowers don’t get stuck paying repeated high fees without making progress on repaying the actual loans.
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