The Corpus Christi Payday Loan Ordinance, Section by Section

The Corpus Christi payday loan ordinance matters more here than a local rule normally would, because Texas itself caps almost nothing. There is no state limit on what a payday lender may charge and no state limit on how much you may borrow. Nearly every real restriction on a loan taken in this city comes from one place: Chapter 5, Article I of the City Code.

Why a city ordinance is doing this work

Payday lending in Texas runs through a credit access business. The CAB arranges a loan from a third-party lender and charges its own separate fee on top of that lender’s interest.

The state licenses those businesses through the Office of Consumer Credit Commissioner and requires disclosures — but it sets no cap on the CAB fee, no cap on the APR, and no dollar limit on the loan. That is why a $500 advance for two weeks commonly costs $110 to $125, roughly 560% to 660% annualised. Those are typical market figures rather than a ceiling, because there is no ceiling.

Into that gap a number of Texas cities adopted a common ordinance. Corpus Christi’s council passed its version on August 11, 2015, recorded in the Code as Ord. No. 030571, and it sits in Chapter 5 — Business Regulations — as Article I, sections 5-1 through 5-13.

What the Article sets out to do

Section 5-1 states the purpose plainly: to protect the welfare of the city’s residents by monitoring credit access businesses in an effort to reduce abusive and predatory lending practices.

It does that three ways, and the structure of the whole Article follows from them:

• a registration programme for credit access businesses (sections 5-5 to 5-9);
• restrictions on extensions of consumer credit — the substance, in section 5-11;
• recordkeeping requirements (section 5-10), plus two consumer-facing duties in 5-12 and 5-13.

Sections 5-2 to 5-4 handle definitions, violations and defenses. Everything that affects the money you are offered is in 5-11.

Section 5-11: the limits that touch your loan

This is the section worth knowing by number, because it is the one a business is most likely to test.

• (a) The cash advanced on a deferred presentment transaction — a payday loan — may not exceed 20% of your gross monthly income.
• (b) A motor vehicle title loan may not exceed the lesser of 3% of your gross annual income or 70% of the vehicle’s retail value.
• (c) The business must use a paycheck or other documentation establishing income to work that out. Your word is not the basis.
• (d) A loan repayable in instalments may run to no more than four instalments, each must repay at least 25% of the principal, and it may not be refinanced or renewed at all.
• (e) A single lump-sum loan may not be refinanced or renewed more than three times, and each renewal must repay at least 25% of the principal of the original loan.
• (f) A new loan taken within seven days of paying off a previous one counts as a refinancing or renewal.

Registration, records, and two duties owed to you

The rest of the Article is about the business rather than the loan, and two parts of it are directly useful.

Registration (5-5). Operating as a credit access business without a valid certificate of registration is an offense, and a separate certificate is required for each physically separate location. Sections 5-7 and 5-8 cover display of that certificate, presentment on request, and renewal — so you are entitled to ask to see it.

Records (5-10). The business must keep a complete set of records of every extension of credit it arranges, including the consumer’s name and address, the principal amount of cash actually advanced, and the length of the loan including the number of instalments.

Your language (5-12). Every agreement — including any refinancing or renewal — must be written in your language of preference. In a city where a great many households conduct business in Spanish, that is a substantive right rather than a formality.

A referral (5-13). The business must give every applicant a form referencing nonprofit agencies that provide financial education and training, and agencies with cash assistance programmes. Ask for it.

What the ordinance does not do

Being precise about the gaps matters as much as listing the rules, because the gap is where the cost lives.

It does not cap the fee. The City limits how much you may borrow and how often the loan may roll, not what it costs. A loan that complies with every line of section 5-11 can still carry an effective rate in the high hundreds of percent.

It does not cap the APR, and it does not shorten the term — Texas terms typically run about 7 to 180 days.

It does not reach every product. Your credit card’s cash advance, an earned-wage app and a bank loan are outside it entirely; the Article applies to credit access businesses.

So the honest summary is that Corpus Christi bounds the size and the repetition of the mistake. The price of it is still set by the market.

Using it

Three things turn this from background into leverage.

Before signing, ask to see the certificate of registration and confirm the business is licensed by the Texas OCCC. Ask what the total cost of credit is in dollars, not as a percentage.

Check the amount against your own gross monthly income — if the offer is more than a fifth of it, section 5-11(a) says it should not be on the table, and the business is required to have documented your income anyway.

And if something goes wrong, the ordinance gives you something specific to point at. A complaint that says a business refinanced an instalment loan, or wrote a fifth instalment, or handed over an agreement in a language you did not choose, is a complaint about a named clause rather than a grievance about a price you agreed to.

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.