The Corpus Christi Auto Title Loan Rules: 3% and 70%

The Corpus Christi auto title loan ordinance is the part of the City Code that decides how large a title loan you can be sold here, and it is written differently from the payday rule that sits beside it. Chapter 5, Article I of the Code — adopted 11 August 2015 as Ordinance No. 030571 — sets two ceilings for a title loan and applies whichever produces the smaller number.

What section 5-11(b) actually says

The provision is short and it does two things at once.

A credit access business arranging a motor vehicle title loan in Corpus Christi may not extend more than the lesser of 3% of the consumer’s gross annual income or 70% of the retail value of the motor vehicle.

Note the word lesser. These are not alternatives the business gets to choose between. Both tests are run and the smaller answer is the ceiling, so a valuable car does not unlock a larger loan for a household whose income is modest, and a high income does not unlock a larger loan against a cheap car.

And note the different measuring stick. The payday rule in section 5-11(a) works from gross monthly income; the title rule works from gross annual income. Confusing the two is the single most common mistake people make reading these ordinances, and it changes the answer by a factor of twelve.

The arithmetic, worked out

The rule only becomes real once you put numbers through it, so here are two.

A household earning $3,000 a month. Gross annual income is $36,000, so the income test gives 3% of that: $1,080. Suppose the car has a retail value of $6,000 — the collateral test gives 70% of that: $4,200. The lesser of the two governs, so the ceiling is $1,080, not $4,200.

A household earning $5,500 a month. Gross annual income is $66,000, so the income test gives $1,980. Against an older car worth $2,200, the collateral test gives $1,540 — and now the collateral test is the smaller one, so $1,540 is the ceiling.

The pattern is worth absorbing. For most households the income test binds, because 3% of a year’s earnings is a smaller number than most people expect and considerably smaller than the car is worth. That is the design working as intended.

Compare it with the payday ceiling on the same $3,000-a-month household: 20% of gross monthly income is $600. So the title route permits a larger advance — $1,080 against $600 — and it does so by putting the vehicle at stake. That is the trade the ordinance is quietly describing.

Why the income has to be documented

Neither test works on a number you simply say out loud, and section 5-11(c) closes that gap.

Income must be established from a paycheck or other documentation. There is no self-certification route, which is exactly what stops the 3% test from being whatever figure produces the loan somebody wanted to write.

Practically, bring the documentation and expect it to be looked at. If income comes from more than one source — a second job, seasonal work on the island, overtime during a refinery turnaround — bring evidence of each, because what is not documented does not count toward the ceiling.

Section 5-10 requires the business to keep complete records of every extension of credit, which is the other half of the same machinery: the arithmetic has to be evidenced on their side as well as yours.

What the ordinance does not do

This is where borrowers are most often misled, and it is worth being blunt about it.

The ordinance caps the amount and the rollovers. It does not cap the price. Texas sets no statewide limit on what a credit access business may charge, and a city ordinance of this kind does not create one.

So a loan can be fully compliant with section 5-11(b) and still carry a fee structure that, annualised, runs into the hundreds of percent. Monthly charges around ten per cent of the amount advanced are common in this market. Those are typical market figures rather than a legal ceiling — there is no legal ceiling.

It also does not change what the collateral is. A title loan is secured by your vehicle, and in a metro spread across Flour Bluff, Calallen, Portland, Robstown and the island, the vehicle is frequently the thing that produces the income the loan is repaid from.

The rollover rules apply here too

Section 5-11 governs the whole product family, so the renewal architecture attaches to a title loan as much as to a payday advance.

If the loan is written as a single lump sum, it may be renewed no more than three times, and each renewal must retire at least 25% of the original principal. Three renewals of a $1,080 loan therefore have to bring the balance down, not merely carry it.

If it is written in instalments, there may be no more than four, each retiring at least a quarter of the principal, and it may not be refinanced or renewed at all. A business offering to roll an instalment title loan here is offering something the Code does not permit.

And section 5-11(f) closes the obvious escape: a new extension of credit made within seven days of paying off a previous one counts as a renewal rather than a fresh start. Paying off on Monday and re-borrowing on Thursday is a renewal, with the renewal’s principal-reduction duty attached.

Before you sign one

Four things, and none of them takes long.

Ask for both numbers. Ask what 3% of your gross annual income comes to, what 70% of the vehicle’s retail value comes to, and which one they are treating as the ceiling. A business operating under this ordinance can answer that immediately.

Ask which structure it is — lump sum or instalments — because the renewal rules diverge completely, and the answer determines what happens if a payment is difficult.

Check the registration. Section 5-5 requires a certificate of registration for each location, on top of the state licence held with the Office of Consumer Credit Commissioner, whose licence lookup is public.

Price the alternatives first. A credit union Payday Alternative Loan is capped at 28% interest plus an application fee of at most $20 and reaches $1,000, which is the same territory as the $1,080 ceiling above at a fraction of the cost — and it does not put the car in the deal.

This article is educational and is not financial or legal advice. Before you borrow, confirm the lender is licensed with the Texas Office of Consumer Credit Commissioner (OCCC) and registered with the City of Corpus Christi, and read the fee disclosure in full.