Austin City Council to Vote on Payday Loan Restrictions

By: Javi Calderon
Austin City Council to Vote on Payday Loan Restrictions

Inspired by the Dallas City Council’s decision to circumvent the State’s position to forego tightening payday loan regulations, the Austin City Council is now considering doing the same.

Councilman Bill Spelman is asking his fellow council members to consider several measures, including following the city of Daallas in requiring deferred deposit lenders to register with the city.

Spelman is pushing two different proposals that also include a measure to cap the maximum amount for cash advance loans, limit how many times a customer can roll over a loan, and limit how much of a customer’s monthly income the they can borrow against. The proposal even includes new restrictions for car title loans.

Part of the reform would restrict where lenders can open up shop, mandating that they stay at least 200 ft away from residential zones, 500 ft away from major highways, and 1,000 ft from each other.

Earlier this year members of the Texas House of Representatives tried to pass statewide restrictions on payday loan interest rates, but were unsuccessful.

The Dallas City Council passed several small changes, including requiring lenders to register, but did not place a cap on interest rates.

The two proposals have thus far been well received. Other than Spelman, council members Mike Martinez and Chris Riley are sponsoring the proposal dealing with zoning, and council members Laura Morrison and Sheryl are sponsoring the proposal that outlines the new loan limits.

The payday loan debate is a complicated one, with critics claiming that payday lenders are sharks who prey on low-income families, while supporters point out that low-income customers lack the credit for more traditional options and need options for borrowing money to cover unexpected expenses. For these reasons, some areas chose to enact relatively tame reforms, in hopes of avoiding throwing off the delicate economic equilibrium of those who depend on the loans.

The Austin City Council will vote on the proposals on Thursday.