Plano Payday Loan Rules: What Texas Law Says and What It Leaves Out

The Plano payday loan rules are mostly Texas rules, and they are unusual. Texas regulates who may arrange a payday loan and what that business must tell you, but it sets no limit on what it can charge. In Plano, Texas, that makes reading the paperwork more important than almost anywhere else, because your protection comes from knowing what you are signing rather than from a price cap.

Payday loans in Texas run through a CAB

In Texas, most payday and auto title loans are not made directly by the business you walk into. That business is a credit access business, or CAB. It arranges a loan from a third-party lender and charges you its own fee for doing so. CABs fall under chapter 393 of the Texas Finance Code, and the third-party lender falls under chapter 342. The state rules are in 7 TAC chapter 83, and CABs are licensed by the Texas Office of Consumer Credit Commissioner.

This structure explains why Texas loans cost what they do. The CAB fee is where most of the cost sits, and that fee is not capped by state law.

What Texas does not cap

Three things that many people assume are limited are not limited at the state level:

• The fee. There is no statewide cap on CAB fees or on the APR.
• The amount. There is no statewide dollar limit on a payday loan.
• Renewals. There is no statewide limit on how many times a loan can be renewed.

Terms commonly run from 7 to 180 days, and 180 days is the longest term. Anything beyond those points depends on the contract you sign and, possibly, on a local rule.

What a typical loan costs in Plano

A typical market figure, not a legal cap, is about $110 to $125 in fees for a $500 loan over two weeks. That works out to roughly 570% to 650% APR. Some businesses charge less and some charge more.

Here is an illustration at $110 per two-week period. You borrow $500. You cannot repay on payday, so you renew five times. That is six periods of fees, or $660, and you still owe the original $500. Your total cost to hold $500 for twelve weeks is $1,160 to repay, with $660 of it being fees. Our guide to the cost to borrow $500 in Plano walks through more versions of this.

What a CAB must give you before you apply

Before you apply, a CAB must give you a consumer disclosure. It compares the cost of the loan with other forms of credit and shows repayment patterns, meaning how borrowers tend to pay off or renew these loans (7 TAC 83.6007). A CAB must also post a fee schedule at its location (83.6004).

In a state with no fee cap, the disclosure is the most useful document you will see. Read it before you give any bank details, and ask for the total in dollars if it is not clear.

No threats of criminal charges

A CAB may not threaten or pursue criminal charges over a check or debit authorization you gave as security for the loan. The only exceptions are forgery, fraud or theft (Finance Code 393.201(c)(3)). A bounced postdated check is not evidence of a crime. If someone tells you that you will be arrested over a payday loan, that is a warning sign. See Plano borrower rights for the wider list of protections.

Does Plano have its own ordinance?

Some Texas cities, such as Dallas, have local ordinances for credit access businesses. We have not confirmed one for Plano, so this guide describes Texas state law and does not claim any city limit on loan size, installments or renewals applies here. Ask the City of Plano and the lender which rules govern your loan. A local rule, if one exists, can only add protection to the state rules.

Renewals: where the cost multiplies

Because Texas does not limit renewals, a loan that is renewed every payday can cost more in fees than the amount you borrowed, as the example above shows. Some loans are written to be repaid in several payments over weeks or months, which spreads the cost out but still charges fees each period. Before you sign, ask a simple question: “If I need to renew twice, what will I have paid in total?” Get the answer on paper.

Licensed, online or not

A CAB serving Plano residents needs an OCCC license whether it has a storefront in town or works entirely online. You can check a license on the OCCC website. If the business has none, the state rules do not protect you in practice, and you should walk away. Never pay an upfront “fee” or “insurance” to get a loan; that is a common scam pattern.

Payday versus installment loans

Installment loans from lenders licensed under chapter 342 are also licensed by the OCCC, and their charges are set by statute and rule according to loan size. For larger amounts they are often cheaper than a CAB loan, but compare the written total cost of each offer before you choose, because the answer depends on the amount and the term.

Title loans follow the same model

Auto title loans in Texas are also arranged by CABs, with the same uncapped fee structure. They add the risk of losing your car. Under the Texas UCC, a lender may repossess without going to court as long as there is no breach of the peace, must give notice before selling the vehicle, and you can still owe a deficiency afterward. In a city where most people drive to work, that risk is real. Read title loans in Plano before considering one.

If you fall behind

The Texas Debt Collection Act covers original creditors as well as third-party collectors, and section 392.301 bars threats of arrest or criminal prosecution. Third-party collectors must file a $10,000 surety bond with the Secretary of State. The Texas Constitution bars wage garnishment for ordinary consumer debt, though money in your bank account may be reachable after a court judgment. The time limit to sue is generally four years, and justice court handles claims up to $20,000. Do not ignore a court notice.

Service members

Active-duty service members and covered dependents are protected by the federal Military Lending Act, which caps most consumer credit, including payday and title loans, at a 36% military annual percentage rate. That rules out typical CAB pricing for covered borrowers.

Cheaper paths to try first

Because a CAB loan has no cost cap, the alternatives matter more. A federal credit union Payday Alternative Loan, or PAL, charges at most 28% interest plus an application fee of no more than $20. Only federal credit unions offer them, and you must be a member, so check eligibility. You can read about the program at NCUA.

Here is an illustration. You borrow $500 on a PAL at the 28% interest maximum and repay in three monthly payments of about $174.50. You repay about $523, which is roughly $23 in interest plus the $20 application fee, so about $43 in total cost. A credit union personal loan at an illustrative 18% rate over three months would be payments of about $171.69 and roughly $15 in interest. Compare that with the $660 in fees above. For more options, see Plano credit unions vs payday lenders. An employer pay advance or a payment plan with the biller can cost nothing.

Where to get help in Plano

If the money is for rent or a utility bill, try help that pays the bill directly before borrowing:

• The Assistance Center of Collin County, 900 18th St, Plano, 972-422-1850, offers short-term rent and utility help for Plano ISD and Wylie ISD households at or under 200% of the federal poverty level. Call to check current eligibility.
• 2-1-1 Texas (dial 2-1-1) and the Plano Housing Authority are other places to ask.

Putting the rules to work

• Check the CAB’s OCCC license.
• Read the cost disclosure and the posted fee schedule before applying.
• Ask for the total cost if you renew twice.
• Borrow the least you need, for the shortest time.
• Remember there is no way to undo a loan once signed, so do not sign until you understand it.

If something goes wrong, contact the business first. Then you can call the OCCC helpline at 800-538-1579 (Monday to Friday, 8 to 5) or use the complaint form at occc.texas.gov. The Texas Attorney General’s Consumer Protection Division also takes complaints about deceptive practices. Our guide on how to file a lender complaint in Plano has the steps.

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 read the fee disclosure in full.