In an effort to create more safeguards for consumers, the Arlington City Council approved new rules Tuesday night for payday lenders.
The vote was unanimous.
Starting Jan. 1, all payday and auto title lending businesses in the city will be required to abide by the following regulations:
- Limit loans to 20 percent of gross monthly income
- Limit auto title loans to the lesser of three percent of gross annual income or 70 percent of retail car value
- Limit repayment to four installments with repaying at least 25 percent of the principal
- Prohibit renewals or refinancing of installment-payment loans
- Register with the city
- Maintain loan records for a minimum of three years
- Translate loan agreements into Spanish or Vietnamese for non-English speakers
- Provide customers with a list of non-profit groups that offer consumer credit counseling
- Pay up to $500 for each violation or infraction
"I'm delighted," said Rozanne Veeser, president of the Fort Worth Council for the Society of St. Vincent de Paul and a proponent of the rules. "I think that's a step in the right direction."
Veeser and dozens of others packed the Arlington City Council chambers Tuesday to show their support for the regulations.
Also in the crowd was Father Daniel Kelley, who is the head pastor at St. Joseph's Catholic Church.
He said the more payday lenders that pop up in Arlington, the more visits he gets from people who have gotten into trouble with the loans.
"They're getting in over their heads. They're not able to pay back the loans, and then they're coming [to the church] out of desperation and asking me for help," said Kelley.
He said he's seen parishioners on the brink of bankruptcy because of the loans, which tend to have high interest rates and fees. He also recently counseled a woman who lost her only car after falling behind on her auto title loan.
"I've had one woman say she had no idea what she was getting herself into," said Kelley.
He applauded the Arlington City Council's decision to approve the rules but said, "they're just the beginning."
"We can now work together as a stronger community to do greater things and help our citizens," said Kelley.
Veeser's group, which serves all of Tarrant County, is in the process of designing a program to help people pay off their payday loans.
Using a shared secure loan, the Society of St. Vincent de Paul would co-sign on a more manageable loan agreement for people who need help paying down their debt.
"So it's really important that whoever gets the loan pays it back, and that way helps the whole community," said Veeser.
She said they hope to roll out the program in February 2016.