New payday lender rules going into effect

El Paso’s payday lenders will soon be facing greater restrictions when a new city ordinance goes into effect next week. So how many businesses are in compliance with the new ordinance?

The deadline is Monday for all “credit access businesses” in the city to register as a part of the ordinance passed in January. If payday lenders, title loan and cash advance stores don’t at least begin registering by then, they could face serious financial consequences themselves.

According to the City Development Department, only 66 such businesses were certified as of Friday, with 27 lenders in the process of review. That means that of 146 businesses registered with the state and listed in El Paso, 56 still have not filed any paperwork with the city.

To register with the city, payday lenders must meet building codes and pay a yearly fee of $195. In addition, payday loans in El Paso can no longer exceed 20 percent of the consumer’s gross monthly income. For a car title loan, the loan can’t be more than 70 percent of the car’s retail value. Plus, the loan has to be paid off within four payments and 25 percent of the principal must be repaid in each payment.

According to Javier Camacho with the City Development Department, the ordinance was modeled around similar measures in other cities like San Antonio.

“What also drove us to really push forward with this ordinance is that other cities are doing it – it’s working well for them,” Camacho said. “They are seeing a more positive interaction with these types of businesses and with their own citizens as well. So obviously if it’s working for others, we make it then work for the city of El Paso as well.”

If payday lenders are not at least in the process of registering with the city before April 1, they could face fines of up to $500 a day for being in violation of the city ordinance.