Yes, but most of these loans are for only a couple of weeks. That is equivalent to 309.5 percent on an annual basis. Pettijohn's proposal limits the term of the loans from seven to 30 days. Until specific rules are adopted, the Consumer Credit Commissioner will continue to investigate and prosecute violators. Lenders who are not licensed by the state may charge up to 10 percent simple interest on any loans.
Licensed lenders follow a more stringent code and maximum rates are higher.
Some payday loan firms may be ignoring state usury statutes by saying they are not making a loan, Pettijohn said. A customer brings in the serial number of an appliance and turns it over to the company. The company then leases the appliance back to the customer and accepts a check for repayment. A case was tried in Harris County and a jury found that this was not a loan. Banks which are chartered nationally have the authority to offer loans or credit cards at higher rates.