The Mesquite City Council unanimously approved a new set of policies Monday regulating local payday lending companies.
Payday lenders offer quick access to money at high interest rates, leaving some borrowers unable to repay their loan.
"What we're really trying to do is just say, 'Be up front,'" said Mesquite Mayor Stan Pickett. "Tell your consumers, 'This is the cost of doing business with us.'"
The new regulations limit the amount a customer can borrow to 20 percent of their gross monthly income. The policy also regulates repayment procedures and requires lenders to display their loan requirements inside their businesses. Each lender will have to pay a $75 registration fee to the city, maintain a record of all loans going back three years and offer assistance programs and greater financial education.
Historically, payday lenders have argued that such policies raise operating costs, which ultimately get passed on to the customer.
Gordon Martinez, who owed nearly $4,000 on a $500 loan, said the new policies will protect low-income and uneducated residents from falling into what he called the "debt trap."
"(Payday lenders) advertise the quick buck. They're not telling the truth (about) the fees, and the interest and the roll overs," said Martinez. "It was only through my church family, family and friends, financial education, and getting away from that cycle of debt that I was able to see a light at the end of the tunnel. It took bottoming out, but that happens to many borrowers."
The new policies go into effect in April.