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San Antonio passes new short term bill

Sep 24, 2012 Quinn Thomas

The short term lending industry is a highly regulated sector. While there are certain areas that are lax on the financial obligations of the companies, many states, counties and cities have their own laws on what lenders can and can't do. Some of these regulations can be detrimental to both the industry and area residents. They can restrict the amount of fees that are tacked onto loans, which could put the income and continuity of the business at jeopardy. Others designate where a storefront can be located, potentially barring financially strapped households from having access to fast cash. A recently adopted ordinance in San Antonio, Texas, now restricts the amount of money an individual can take out per loan. Texas law approved by city council
On September 20, the San Antonio City Council voted to allow a new restriction to be placed on the short term loan industry. According to WOAI-TV, the ordinance will bar city residents from taking out a short term loan in an amount that is more than 20 percent of their gross monthly income. Furthermore, if people are in bad financial straits, they won't be able to take out more than four installments, nor can they roll loans over or renew them more than three times, the source detailed. The move also affects auto title lenders, as individuals in San Antonio will no longer be able to take out more than 3 percent of their gross annual income or 70 percent of the car's value, according to WOAI. Next steps
WOAI explained that many area lenders are planning on appealing this decision in the state legislature in January. A number of company owners think that the city council had no authority to rule on such matters, per state laws. "It's 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," Advance America spokeswoman Deborah Reyes told WOAI. Reyes then told KSAT-TV citizens should be upset that lawmakers are trying to tell them how to best manage their money, citing an Advance America survey that found that is one of the main problems in regulation. For now, however, lenders in the Texas city need to be acutely aware of all of the details. Not only do they have to enforce the financial aspects, but they are also now required to provide bilingual forms doled out by the city government to borrowers that explain the repayment process and interest charges that will be levied, WOAI detailed.