City of Amarillo takes action against abusive payday lending and title loans
Amarillo, TX - Amarillo is joining the ranks of 19 other cities across Texas that created their own ammo to fight abusive payday lenders after state lawmakers failed to act.
There's no limit of payday lenders in Amarillo but there could now be a limit to how much they can loan out. Payday lenders and auto title loans are meant to be a short-term solution but can cause long-term financial struggles for someone who is already in a tight squeeze for fast cash.
"There's a lot of them moving to town," said Mayor Paul Harpole. "There's a lot that have existed here. We're not telling them to leave, we're just asking them to play fair."
The city council has now created an ordinance to stop the cycle of debt that affects many payday customers in our area. The ordinance places restrictions on the extension of consumer credit a lender can offer. The payday loan cannot be more than 20 percent of your monthly income. This means someone who makes minimum wage and works 40 hours a week could only take out a loan of around $260.00. A title loan on a car cannot exceed three percent of your annual income or 70 percent of the car's retail value.
The restrictions aim to protect consumers from taking out more than they can pay back with high interest. "They have to qualify people in some way for these loans with the ability to repay the loan, which seems pretty reasonable," said Harpole.
Despite having multiple public payday loan meetings, the payday lending community has been relatively silent on the proposed regulations. "After the first meeting, somebody said you really didn't give us enough time to speak," said Harpole. "I challenged that and said you were actually invited two or three times to speak and they backed off. We haven't had any other comments and we've been very curious as to why they haven't commented. As we go through this ordinance process, this law making, we would ask for comments so that we make the right decision."
The city will have a final vote on the ordinance at their meeting next Tuesday.
Madison Alewel - NewsChannel 10