POSTED: Tuesday, January 7, 2014 - 9:02pm
UPDATED: Thursday, January 16, 2014 - 9:51am
Lending companies warn this may not be a victory for consumers
(El Paso) KTSM — In a 6 to 1 vote, El Paso will now be among the 5 cities in Texas to regulate payday lenders.
With the new ordinance set to take effect January 16th, tighter regulations will be enforced on lenders.
This means, lenders will have 60 days from January 16th to register their business with the city as a credit access business.
The ordinance will also cap how much people can borrow and how many times they can renew the loan.
During the city council meeting, Representative Larry Romero, who rarely speaks up said he is against the poor being taken advantage of.
But he is also against regulating what people should do with their money.
“It's not our responsibility to go in there and tell someone how many times they can borrow, how much they can borrow,” said Romero. “I think those are decisions, personal decisions that somebody should be able to make on their own.”
And some lenders warned this ordinance is bad news for consumers.
"We can enact the ordinance, that's not a problem,” said Supervisor of Pancho’s Car Title Loan Brian Figueroa. “But who it ultimately hurts is the consumer."
Pancho’s Car Title Loans has been in business for about 10 years, and Figueroa said the ordinance that will go in effect January 16th will put a bigger dent on the consumer's wallet.
"You’re going to take a customer, who has a minimum payment and then tack on an additional 25 percent of the total loan, to pay it down, that's difficult for anyone to do," he said.
Figueroa isn't the only one who feels this way.
Family owner of Benny's Pawn Shop, Saul Frank agreed.
He said the city will eventually drive out local businesses.
"The small local independent payday lender probably won't be in business," Frank said.
He added, the more the city interferes with local businesses, the more consumers suffer.
"I think the city council, the city itself needs to stay out of the business of the payday lenders. Or any business in the city for that matter, especially if it has do to with finance," Frank said.
Romero added that this kind of behavior begs to question all the bad temptations out there.
"I understand payday lending is a problem, but so is alcohol consumption,” he said. “So does that mean we are going to pass an ordinance saying you can only go into bars x number of times a month?”
But others saw today's ruling as a step in the right direction.
Especially, Dallas Council Member Jerry R Allen.
"In Dallas, we have slowed down the payday sack, we have taught them some manners, we are teaching them, some manners, but quite frankly, the way we have all come together for the common good for our people, that’s be the most important part of today,” he said.
Representative Emma Acosta said this is only the beginning.
Revisions to the new rules can always be made in the future. "It could be a continuous process,” she said. “I mean there’s nothing that says we can't go back and from coming back in the future with amendments to it, but we have to start somewhere.”
But some fear the future may be a little too late.
"It sounds like a victory, it sounds like it’s going to help people, but it’s not functional,” said Figueroa. “People can't do this. They are not going to be able to meet these terms,"
For a list on tips when taking out a loan click on the link below.