BAD CREDIT LOANS IN TEXAS
Texas is the second largest state in the United States for size and population. It is known as the 'Lone Star State' as a reminder of it's struggle for independence from Mexico. This 'Lone Star' is found on the Texas flag and it's official state seal.
Texas has a population of 28.7 million which represents 8.68% of the total US population. Some of the major cities in Texas are Houston, San Antonio, Dallas -Fort Worth area. Due to the Balcones Fault, the Texas landscape is very diverse - from the canyons and caves, lakes and mountains, and the ocean there is something for everyone to do.
The main industry in Texas has been oil and gas which has greatly influenced the State's economy and population growth. Besides oil & gas, Texas has a strong varied revenue base from agriculture, livestock, natural resources and mining. Texas is the 6th largest producer of oil globally.
Yet, despite this strong economy, there is still 14.7% that live in poverty. The annual median household income is $57,051 which is comparable to the national average. Poverty income for a family of four is listed at $24,600. Texas has an unemployment rate of 4.0% which means it is fairly easy to find work. The issue is can you find work that pays the bills and offers you a comfortable life-style. The living wage before taxes for a family of four (one working adult) is $52,024. Teachers in Texas earn on average $51,868 - you would earn your own home and possibly your partner would work part-time so you and your family would live very comfortably.
BAD CREDIT IN TEXAS
With low unemployment and a median salary of $57,051, how could there be fair to bad credit in Texas. Did you know that the state of Texas is in the bottom nine states for the lowest average credit score. The Vantage Score rates the average credit in Texas at 656 with the average amount of $5,960 owing on credit cards.
LOANS FOR BAD CREDIT
A bad credit loan is also referred to as a personal loan or an installment loan. An installment loan has similarities to a payday loan. They both are used for emergency funds, unpaid bills, unexpected health issues and even travel expenses. The difference lies in how they are repaid. With a payday loan, the money you borrowed whether it is $500 or $1,500 is expected to be repaid in full with the interest and fees on your next paycheck. With an installment bad credit loan, the lender gives you up to 6 months to repay the loan, taking a much smaller percentage of your bi-weekly or monthly paycheck. When a person has a credit score below 600 they may be forced to take a payday loan for those cash emergencies. If you do not repay the loan with your next paycheck, the extremely high interest will compound, making it even more difficult to repay causing the ripple effect of lowering your credit rating even more.
The state of Texas has many lenders that offer installment loans to those with fair to poor credit. This is definitely the way to go as it gives you time to repay the loan and rebuild your credit during the repayment period.
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First of all, we must understand what the term 'Usury' means - the Webster dictionary states that 'usury' is the practice of lending money at unreasonably high rates of interest. If there are not any laws in place restricting interest rates, lenders can charge in excess of 200% interest.
Payday loans often set the borrower up for failure. They lend the requested amount of money without doing a credit or employment check to confirm that the borrower has the ability to repay the loan. If the borrower cannot repay the loan from their next paycheck, the loan, interest and fees roll-over to the following month and interest is charged on the total 'roll-over', thus setting the borrower up for failure. If the lender registers this on the borrower's credit report, their scores plummet prohibiting them from further lending from a traditional lender.
INTEREST RATES IN TEXAS FOR BAD CREDIT
The Statutory Laws for interest rates in Texas have been limited to 6% or 18% on judgements. These laws allow for an exemption for business and commercial loans, investments and open-ended accounts. Texas does not regulate their payday lending and the interest rates they charge the borrower. If the lender and the borrower agree to the terms and rates of the loan, then the statutory laws do not apply.
Payday lenders have been banned in 15 states to-date - The Consumer Financial Protection Bureau have placed strict guidelines on payday lenders and auto-title lenders which are scheduled to be implemented in 2019. The C.F.P.B. feel that those vulnerable borrowers need to be protected from predatory lenders. Often these lenders will target those they know cannot repay the loan. The C.F.P.B. wants to implement regulatory laws that these lenders must follow underwriting guidelines and roll-over limits that protect those who use short-term lenders.
Texas, on the other hand, feels that by restricting how payday lenders operate, those who are unable to access traditional loans with good rates and terms will lose a valuable resource for when they require emergency cash. With 14.7% (2018) of all Texans living in poverty, these regulations remove their access to short-term cash.
It is definitely a 'catch 22' scenario. This group of people live in poverty, struggle to make ends meet - they use a payday lender to pay this month's bills but are unable to repay the loan next payday. The cycle begins and often the lenders become extremely aggressive in collecting their loan with interest and fees. Or this group of people does not have access to short-term loans, cannot pay their bills and end up homeless with little to no chance of breaking the cycle.
HOW TO BREAK THE CYCLE OF PAYDAY LOANS
If you have borrowed short-term cash from a payday lender and are finding that the fees and interest are out of control - get expert advice. There are many nonprofit organisations that will help you work through the process of repayment and getting your finances back on track. They will help you settle your debt with your creditors and help you set up manageable monthly repayments. As well, we recommend Novita Financial, a free online credit repair program to help you rebuild your credit.