District 1 Councilman Diego Bernal has placed for discussion on the City Council Governance Committee a directive to the City Attorney to create an ordinance which would regulate payday and auto title loan businesses.

“San Antonio is a city comprised in large part of proud, modest people, and these businesses prey on our most vulnerable residents. We have a responsibility to step in and protect them,” said Councilman Bernal. “These companies exploit loopholes in laws designed to keep them from hurting people. This is our attempt to close the gap.”

These businesses provide high-cost short-term payday loans and auto title loans, with interest rates that can exceed 500 percent. Such predatory lending targets San Antonio’s poor and middle class, as well as the broader Texas community.

Currently, Texas has a higher payday loan usage rate than the national average: national average rate – 9 percent; Texas usage rate – 12 percent. Over half of the borrowers must roll-over their loan. The result is that any subsequent payments go mostly towards the interest while only a small fraction goes towards the principal balance, making it nearly impossible to pay back the loan without going further into serious debt.

“If between me, my family and my friends I cannot come up with $50 or $100, I'm probably desperate,” said Councilman Bernal. “I have no tolerance for, and this City should not tolerate, any business that preys upon people's desperation. This is our response.”