Recommendations

Texas has set reasonable limits on interest rates since it was a republic. Such usury limits have balanced the interests of lenders with those of borrowers and prevent "loan sharking" and other abusive practices. Unfortunately, loan sharking in Texas is back as lenders use loopholes in the law to increase their interest charges far above statutory caps.

Consumers Union SWRO concurs with the Texas Sunset Advisory Commission and Texas Senate Economic Development Committee which have concluded that the sale leaseback loophole must be closed.
Unregulated payday lenders prey on cash-strapped people and trap them on a treadmill of debt that they cannot get off. Such abusive lending practices provide a glimpse into what might happen if Texas were to repeal its existing usury limits for consumer loans. To protect consumers in the spirit of the Texas Finance Commission's payday loan rule, Consumers Union SWRO recommends to:

• Keep existing consumer protections for consumer loans. Usury limits on loans of only a few hundred dollars are already quite high, and should not be increased.
  
  
• Close the existing loopholes that allow abusive practices like sale leasebacks. Assure consumers that they will pay reasonable rates, under fair terms, when they borrow money.
  
  
  

Click here for the Sale-Leaseback Companies chart (pdf format) 

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