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Councilman targets predatory lenders

Diego Bernal to introduce new regulations for payday, auto title lenders

SAN ANTONIO - A San Antonio city councilman plans to introduce a proposed ordinance this week to crack down on so called cash advance and vehicle title lenders.

District 1 Councilman Diego Bernal said Tuesday he believes the businesses prey on the city's low income citizens and he wants to impose new regulations.

"We have a lot of people in this city who are vulnerable in that particular way and I just felt like I had to do something about it," Bernal said.

Bernal believes the city has legal standing to impose regulations on the payday loan industry.

He wants San Antonio to join other Texas cities like Dallas, Austin and Houston in their fight to crack down on predatory lending.

"When your whole business model is predicated on people's desperation, you take advantage of that, and then you string them along for years and push them further along into debt then we have a serious problem," Bernal said.

Right now, there are 210 registered credit access businesses in the city. Many charge borrowers annual percentage rates upwards of 500 percent.

According to Bernal, Texas borrowers pay an average of $840 for a $300 payday loan and $1600 for a $700 auto loan.

"They charge them incredible fees and incredible interest rates which really put them further into debt and make them more desperate then they were to start off with," Bernal said.

The proposed ordinance would limit payday loans to 20 percent of the borrower's monthly income, limit auto loans to 3 percent of the borrowers monthly income or 70 percent of the vehicle's value, limit loans to three rollovers and require each payment to reduce the loan principal by 25 percent.

"We want people to be able to get money. We also want them to be able to earn their way out of the extreme debt that these lenders can put them in," Bernal said

If his proposal has enough support from his fellow council members, a draft ordinance would be written and sent to the Governance Committee for consideration.

With council on vacation in July, the earliest the ordinance would come up for a vote would be early August.

Bernal said he's already been threatened by industry lobbyists who promise to sue if the ordinance is passed.


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