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City Council to revisit regulation on payday lenders on Tuesday
Monday, January 6, 2014 - 8:37pm
El Paso, Texas (KDBC) — Payday lenders are supposed to be facing tougher rules in El Paso soon, but city council will decide tomorrow if they'll actually go through with the restrictions.
There are a few cities in Texas that have adopted city ordinances in order to help keep consumers from falling into what they call predatory loans.
I spoke with one El Pasoan who said it took giving up his s-u-v to realize the dangers of some of the pay day loan companies.
“Every year I try to finish with this payment, you know with this loan, but it's hard because the interest rate is too high," said an El Pasoan who didn’t want to reveal his identity.
He said he had been taking out loans for about 3 years now, but admits he's paid more than he ever expected.
"Last year 2013 in June, I lost my truck,” he said. “I lost my truck because I told the company I didn't have money for the payment."
He's one of the many consumers El Paso leaders are trying to protect.
El Paso became the fourth city in the state last year to adopt the ordinance, under the old city council.
Local lender EZ Loans provided us with flyers, which they clearly state the consequences of not paying back your loan.
In the flyers they also specify the amount of money you would end up paying if you were to take out a certain amount.
But all lenders in El Paso will be required to register their business with the city with a credit access business registration.
Lenders will need to cap how much people can borrow and how many times they can renew the loan by January 16th.
"So hopefully El Paso can continue on, can implement the ordinance as it was passed," said Former City Representative Susie Byrd.
That's unless at Tuesday’s City Council meeting the new council votes to completely rescind the ordinance altogether.
Byrd hopes the new council will move forward with the law.
"There is governmental interest in making sure that people are not stripped of their buying power,” said Byrd.
A power this man said he lost through a lesson learned the hard way.
"It’s the last time I do this; you know we don't have transportation now I have to take the bus. I just don't think it’s fair what they are doing."
But what if you need to take out cash fast before January 16th?
The Better Business Bureau suggests to first figure out exactly how much money you need to borrow.
“It’s very important that consumers limit the amount that they borrow,” said Communications Director of the BBB, Margo Lepe. “So I would definitely encourage them to set up a time frame so that they are able to pay it off so that they don't fall into having to maybe rollover these loans.”
Lepe said you can always visit bbb.org and check out any company you wish to review.
She said the best way to avoid falling in a debt cycle, is by asking as many questions as possible.
Find out the interest rates when taking out a loan. Ask what would happen if you fell behind on a payment.
Can your car get repossessed if you can’t pay off your debt, when taking out a title loan?
Shop around to the different loan companies and pick the best one for you.
Lepe says the more you know about the loan you are getting, the less likely you’ll fall into a debt cycle.