A Look at Legislation on Dallas Car Title Loans

Back in 2011, the city of Dallas passed legislation that directly impacted car title loans. Dallas passed these laws to protect consumers' rights, so it's important to understand how this legislation impacts you if you're thinking of turning to one of these short-term loans. With the passage of these lending practices for car title loan and payday loan businesses, Dallas became the first city in Texas to produce such laws.

These laws against Dallas car title loans were backed by many organizations, including the Anti-Poverty Coalition of Greater Texas, the United Way of Greater Dallas, Catholic Charities, the Friendship West Baptist Church and many others, all of which came together with the belief that interest rates up to 500% were simply too much. 

Texas car title loans received a reputation for creating cycles of debt for consumers who turned to these loans. After all, when you turn to a title loan, you are placing your vehicle at risk for repossession, and this may be one of your most precious possessions and something you need to work. What's more, interest rates can be a bit confusing and there is no ability to make a partial payment in most cases. Consumers who can't pay back the initial loan on time typically roll over their initial loan into a new one at the same interest rate with the balance remaining untouched. If you can't pay the loan back in full, your car will be repossessed and sold.

The bills passed by Dallas were designed to enforce the industry and require lenders to register with the Office of Consumer Credit and pay a licensing fee to go toward the Texas Financial Education Endowment. These laws also require lenders to report consumer transaction data and post an OCCC helpline number and even offer restitution for consumers who were financially injured by a CSO violation.

There is also now a zoning ordinance that forbids providers of payday loans and Dallas car title loans to operate within 1,500 feet from a similar business, within 300 feet of a residential district and within 500 feet of an expressway.

It is certainly true that unregulated and unlicensed lenders may diminish property values, make crime more prevalent and cause further financial grief to consumers who are already struggling. That's why it's so important to seek out a reputable lender, but it does not mean that the industry as a whole preys on individuals or that car title loans in Texas are an unnecessary service.

Are Car Title Loans Really a Bad Idea?

The truth is, car title loans in Texas are a necessary service. If you have bad credit, you cannot obtain a loan from a traditional lender. If you're facing a sudden emergency, like a broken down car or an inability to put food on the table, you may need cash in a hurry to help you get through until payday.

Consumers must learn to be wise about finances and read and understand the information presented before signing any documents. If you cannot afford the cost of a car title loan, it is not going to be a healthy solution to your problem. If you can, however, afford the loan and simply need money to get you through a tough spot, title loans can be a smart choice if used responsibly.