Dallas

Lewisville Considers Alternative to Payday Lending

As the Lewisville City Council works to better regulate payday lenders, a new option has just arrived at the table: community loan centers.

City leaders said it's an idea that originated in South Texas and is now moving its way into the Dallas-Fort Worth area.

With community loan centers, a nonprofit works with local businesses to offer loans of up to $1,000 to employees who then pay back the cash through automatic withdraws from their paychecks.

Pat Smith, with Serve Denton, has also been looking into the option as a way to combat the surge of people he's seen getting buried by payday loan debt in Denton.

"They have an 18-percent interest rate, but compared to a payday loan that's really phenomenal," said Smith.

Payday lenders are known to charge much larger interest rates for loans, some 400 percent or more.

The stores often allow those who otherwise wouldn't be able to get a loan – due to credit or other factors – the chance to get money in a pinch.

Lewisville City Council member T.J. Gilmore said there is a place for that sort of business, but that they need to have alternatives for those who simply can't handle that kind of burden but find themselves with few other options.

"How can we help our residents access these types of banking resources while at the same time making sure they're not getting sucked into something they can never repay?" Gilmore said Wednesday.

Right now Lewisville and Serve Denton are looking at the nonprofit Business and Community Lenders of Texas who recently opened a community lending center in Dallas.

Gilmore said talks are still early for the Lewisville council, but that the idea is promising.

Smith said Serve Denton is looking for grants to help bring the option to town there. He admits it's not a fix-all to the current situation as only those employed by businesses offering the loans would be able to take part, but he said it's a first step and an option in a situation where there are currently few.

"If you don't have good credit, it's just not going to happen and so we have got to look at other ways of doing this," said Smith.

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