Like every other person who struggles financially, Janice Rivera figured that she and her husband would be able to repay a loan of $1,500 two years ago, stating that “The amount repaid would go to the principal because the auto-title company was like a regular bank” after she borrowed the money from an auto-title lender.
Rivera noticed that after paying more than $2000 towards the loan she still had to repay $1500. The couple were able to pay off the loan last month, but this experience made them loathe borrowing money even more.
The problem here is the state, Texas. Every two years, particularly at this time, the Texas Legislature is in the final weeks of its 140-day session. Lawmakers such as Tom Craddick, R-Midland, Rodney Ellis of Houston and Royce West of Dallas are working every session for a legislation aimed at people that are struggling financially.
To strengthen the point here, Craddick stated that even though Texas is topping the charts in income and jobs in the country, the interest rate is ridiculously high. Only between 2013-2014 people have repaid more than $2.9 billion in fees for these loans.
Advocacy groups such as AARP Texas, Texas Appleseed and Texas Fair Lending Alliance declared that the interest rates for short-term loans are 500 percent or higher. To put this into perspective, for a person that is unable to pay off a $500 loan on time, the total amount repaid plus fees is going to result in $3,812.80, with an average interest rate of 522 percent.
Craddick was also keen on praising 22 cities in Texas, for passing ordinances that restrict the operations of payday and also the auto-title lending industry.
With this in mind, the industry stated that its stores are beneficial for those who are in need of an emergency fund. The payday and auto-title industry is supported by the influential Texas Association of Business.