Predatory lending is a big problem across Dallas. In recent years, the number of auto title and payday lending locations has exploded and now over 200 storefronts exist within the city.
Payday and auto title lenders have found a loophole to escape state licensing and are “legally” able to charge outrageous rates, trapping many people in cycles of debt while draining community resources. The Texas Legislature must ultimately act to regulate these lenders so that their practices are fair and reasonable; however, since there is a heavy concentration of these locations in Dallas neighborhoods – particularly in areas already struggling economically -- the Anti-Poverty Coalition of Greater Dallas is calling on the City of Dallas to take action and reduce the negative impact of these lenders through a strong zoning ordinance.
These loans create a treadmill of debt. Few borrowers can repay the loan in full, plus interest, and pay for other monthly expenses. Thus, borrowers must to re-borrow, or “rollover”, the loan in order to fill the gap in their budget created by their loan. None of the rollover payments apply towards the loan principal, so the cost to borrow the money frequently exceeds the original loan principal. Over half of payday borrowers rollover at least once before they pay the loan off – and nearly one in four borrowers rollover loans multiple times.
Because payday loans are secured by a borrower’s post dated check, payday lenders can hold borrowers’ bank accounts hostage.
If the borrower cannot pay in full or the exorbitant fee to rollover the loan, they will face heavy charges from both the payday lender and from their bank in overdraft charges.
Fees for a one-month $4,000 auto title loan exceed $1,000. This $1,000 fee must be paid every month until the loan is paid in full, or a missed payment can result in repossession of the car.
Last year, nearly 200,000 vehicle liens were filed in Texas by unlicensed auto title lenders.
Contact your State Senator and Representative to tell them that you support Texas regulating payday and auto title lenders.
Sign the petition asking the City of Dallas to enact an ordinance to lessen the concentration of payday and auto title stores and reduce their harmful impact on our neighborhoods.
THE ANTI-POVERTY COALITION OF GREATER DALLAS
The Anti-Poverty Coalition of Greater Dallas is a new coalition that seeks to move 250,000 people out of poverty permanently by 2020 by coordinating efforts to keep people from falling into poverty and increasing pathways out of poverty. We are a broad-based coalition that unites the business community, faith-based organizations, social service agencies, and foundations. Join our fight today!