On September 14, 2016 TCCRI submitted written testimony before the House Investments & Financial Services Committee regarding short-term lending and the adequacy of consumer access to credit.
Introduction to Short-Term Lending
The Texas short-term lending industry consists primarily of payday and vehicle title lenders who offer retail financial products and services to consumers. Most consumers of small-dollar, short-term loans live paycheck to paycheck, and require quick access to capital to cover an unexpected expense, like a car repair. Many borrowers are unable to access credit elsewhere, either due to poor credit history, or because the small dollar amount of the loan does not provide a sufficient incentive for banks to offer a similar product.
The demand for these loans has increased, with some estimates indicating that national payday loan volume grew more than five-fold from the late 1990s to the mid-2000s, when loans totaled approximately $50 billion. As of 2014, more than 20,000 locations make short-term loans to approximately 19 million families per year.Those locations outnumber all McDonald’s, WalMart, and Home Depot locations combined.