San Antonio Regulates Payday Loans

San Antonio city flag
The San Antonio city council passed a new ordinance that regulates payday loan lenders. This makes San Antonio the third city in Texas to pass this type of ordinance, following Austin and Dallas. In response to this change, both proponents and opponents of the industry filled the city council chambers on Aug 20 and vocally expressed their views.

“I don’t think it is fair for people to be charged unjust interest on loans they borrow,” said Sister Ferdinand of Holy Spirit.

Others commented that the opposition against payday loans in the city had been a nearly-biblical scale battle akin to David versus Goliath.

“I personally believe that without state action we have no choice but to step in because nothing else has happened and no one had done anything,” said Diego Bernal, Councilman for District 1.

This battle has been ongoing for years as consumer advocates continue to pressure state legislators to approve more stringent guidelines for short-term lending, namely payday loans.

While taking on the payday loan industry in state legislature will prove difficult—namely due to the industry’s lobbyists—San Antonio has at least made Goliath retreat out of their own city.

“What we want is something in place in San Antonio that is reasonable, that is workable, that is fair to the consumer and to the industry. And I’m confident that that’s what we’re passing today,” said Mayor Julian Castro.

A spokesperson for Advance America, a short-term lending business, countered that this ordinance was not a decision that local government officials should have made.

“It is our belief that the state legislature, when they acted last session, that they basically said the appropriate regulatory framework for credit access businesses is at the state level,” said Deborah Reyes, spokeswoman for Advance America.

Although San Antonio may have won the battle, the war is far from over.

The payday loan industry is predicted to continue the fight in January at the state legislature where they are expected to push for the repeal of such ordinances. Consumer advocates express that they will be prepared for a second round match between David and Goliath to protect their hard-won ordinance.

As it stands, the ordinance authorizes the city government to limit payday loans to 20 percent of a borrower’s gross monthly income. It also places limitations on auto title loans, roll-overs, contract wording, as well as a requirement to further inform borrowers about assistance and financing.