But these fees are significantly higher than allowed under the payday loan regulations. Last year, the Texas Office of Consumer Credit Commissioner attempted to end usurious lending by payday loan companies by instituting a regulation that requires licensing for all payday lenders and caps fees. A sale-leaseback arrangement looks just like a payday loan, except that the lender records the serial number of two appliances. One company advances the cash on a daily basis, for a minimum of three days or a maximum of 21 days, charging customers a daily fee. This company will also extend the loan period at the option of the borrower.
Regulations require lenders to turn long term extensions into declining balance loans.
The largest chain payday lenders now make loans through national banks-banks that take little or no loan risk but shelter the loans from the reach of state interest rate limits. Texas Administrative Code, 7TAC Sec.