Credit Access Business – Payday/Title Loans
On September 20, 2012, the San Antonio City Council approved Ordinance 2012-09-20-0739, effective January 1, 2013. It addresses the registration and oversight of credit access businesses (CABs) that provide payday loans and/or auto title loans to consumers. The City of San Antonio Finance Department has been designated to administer the City’s CAB Program.
In addition to the registration requirement, CABs must follow lending guidelines that place restrictions on extension of consumer credit.
Consumers are able to file a complaint if the CAB violates requirements of the ordinance.
The provisions of the ordinance include:
- Require Credit Access Businesses to obtain a valid certificate of registration from the City of San Antonio annually;
- Limit payday loans to 20% of the borrower's gross monthly income;
- Limit auto title loans to the lesser of 3% of the borrower's gross annual income or 70% of the vehicle value;
- Limit loans to no more than four installments or three rollovers or renewals (a rollover or renewal is defined as an extension of consumer credit made within seven days of the previous extension of credit);
- Require the proceeds from each installment or renewal to reduce the loan principal by 25%;
- Require that every contract be written in a language the borrower can understand, or be read in its entirety to any borrower who cannot read;
- Require the lender to provide to the borrower a form created by the city which references non-profit agencies that provide financial education and agencies with cash assistance programs and contains general information regarding extensions of consumer credit