HB 846 is A Wolf in Sheep’s Clothing: Legislation Claims to “Regulate” Payday Lenders, But Actually Raises Interest Rates and Fails to Close Critical Loophole

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Author:
Celia Cole /(512) 320-0222 x110

April 1, 2005

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A payday loan is a short-term, high-interest loan that some low-income Texans rely on when they have trouble paying their bills between paychecks. These storefront lenders charge exorbitant interest rates"sometimes as high as 800 percent"in addition to high “rollover” fees that extend the loan when borrowers can’t repay it on time. Payday loans take advantage of low-income families desperate for fast cash and can trap borrowers in a spiral of debt.