Susie Byrd to present ordinance to curb the harmful
effects of payday loans and auto title loans
on El Paso consumers
On Thursday, December 6th at the Special City Council
Meeting that starts at 9:30am, Susie Byrd will urge the Mayor and Council to
begin the process of adopting an ordinance whose intent is to curb the harmful
effects of payday loans and auto title loans for El Paso consumers.
“The State of Texas has failed to protect consumers from high cost
loans that trap them in a cycle of debt where they continue to pay fees and
interest but never pay off the loan. Many cities are stepping up to protect
Texas consumers. El Paso should join them,” says Susie Byrd, City Council
Representative for District 2.
According to the Texas Fair Lending Alliance, “The average Texas
borrower pays $840 or more for a $300 loan and around $1,000 per month in fees
alone for a $4,000 auto title loan. Borrowers often pay these fees month
after month without reducing the loan principal.”
The proposed ordinance modeled after similar legislation passed in
Dallas, Austin and San Antonio would require:
- Limiting payday loans to 20% of
the borrower's gross monthly income.
- Limiting auto title loans to
the lesser of 3% of the borrower's gross annual income or 70% of the
vehicle value.
- Limiting loans to no more than
four installments or three rollovers or renewals (a rollover or renewal is
defined as an extension of consumer credit made within seven days of the
previous extension of credit).
- Requiring the proceeds from
each installment or renewal to reduce the loan principal by 25%.
- Requiring that every contract
be written in a language the borrower can understand, or be read in its
entirety to any borrower who cannot read.
- Requiring the lender to provide
to the borrower a form created by the city, which references non-profit
agencies that provide financial education and agencies with cash
assistance programs, and contains general information regarding extensions
of consumer credit.
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