Installment Loan Regulations in Texas

Installment loans are legal in the State of Texas, though there are some regulations of their use.

Installment loans are a type of loan where a set amount of money is borrowed all at once and is repaid over a fixed number of payments known as installments.

These loans are also referred to as personal loans.

Personal Loans

They are typically used to pay for an unexpected expense, such as medical bills, or a fixed expense that cannot be charged to a credit card, such as a mortgage or auto loan.

Because these loans are legal in Texas, there are a variety of business across the state which offer personal loans.

When unexpected bills arrive or income loss occurs, personal loans can be useful. State and local regulations exist to ensure lenders and borrowers are protected in this process.

Installment Loan Laws and Regulations in Texas

The regulations for installment loans in Texas are located on the state website, but below are the most important facts to know when seeking personal loans in Texas:

Office of Consumer Credit Commissioner Texas
Finance Commission Building
2601 N. Lamar Blvd.
Austin, Texas 78705
TEL 512-936-7600

  • Texas Average APR: 699%
  • Statute Citation: Consumer Loans: Title 4, Subtitle B, Chapter 342
  • Regulator: Office of Consumer Credit Commissioner
  • Interest and Permissible Fees: 342.201 – Add on interest of $18 per year for loan of $300 or less is permitted, $8 per year on loan of $301- $2,500; 30% APR for loans up to $500, 24% APR on loans of $501-$1,050, 18% APR on loans of $1,051- $2,500; $25 administrative fee for loans exceeding $1,000 and $20 for loan less than $100; default charge after 10 days of $.05 per $1.00
  • Maximum Loan Amount: $2,500
  • Consumer Loans: Title 4, Subtitle B, Chapter 342

Online Installment Loans

Personal loans received and originating on the internet are also legal in Texas. The regulations for an online installment loan is the same as those received in person.

But, some local municipalities do not allow online loans or have stricter regulations.

Local Regulations

Though the regulations above are enforced by the state, local municipalities are able to pass their own, stricter ordinances if they wish. Some cities with more stringent regulations include Austin, Dallas, and Arlington, TX.

For example, the city of Arlington requires that no interest rate for installment loans be higher than 20% of the borrowers monthly income.

It is important to be familiar with your local regulations as well as the above state regulations when seeking an installment loan estimate.

Issues between Lenders and Borrowers

Texas law states that issues with the terms of a loan or suspected illegal action be resolved first with the lender. However, there are two places to turn if the issue is not resolved:

  1. The Texas Office of Consumer Credit Commissioner (OCCC) offers a way, using this form, to file a complaint against a lender which then becomes public record to protect other borrowers.
  2. The Texas Attorney General’s office also accepts complaints towards lenders and can offer legal aid in some cases.

Therefore, installment loans in Texas state are legal and can be a convenient way to pay for unexpected bills or expenses.

Be familiar with these state regulations, as well as local regulations, to ensure needed installment loans are fair and legal.

Texas state

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