Texas has a 10% usury cap on consumer loans. Look it up: Texas Finance Code Chapter 342 says a licensed lender cannot charge more than 10% interest on a small consumer loan. So how does a $300 payday loan in Houston end up costing $370 in two weeks, and well over $1,000 after a few months of refinancing? Because the storefront you walked into is not the lender. It is a Credit Access Business, and the fee it charges sits outside the 10% cap entirely.

If you have ever signed a Texas payday loan agreement and thought the numbers on the page did not add up, this is why. The state has two statutes doing two different jobs, and the gap between them is where the cost lives.

How Texas Lets Storefront Lenders Charge More Than the Legal Cap

Most states regulate payday lenders directly. Texas does something different. Under Texas Finance Code Chapter 393, a storefront can register with the Office of Consumer Credit Commissioner (OCCC) as a Credit Access Business, or CAB. The CAB does not lend you the money. Instead, it "arranges" a loan from a third-party lender (often a related entity) and charges you a brokerage fee for that service.

That fee is not capped. The lender's 10% interest cap still technically applies, but the CAB fee runs on a separate track, governed by the Credit Services Organizations Act rather than the consumer loan code. The OCCC supervises CABs, licenses them, examines their books, and can issue administrative penalties, but it has no statutory authority to cap what they charge. Only the Texas legislature can do that, and so far it has not.

So you sign two documents at the counter. One looks tame: a small interest charge from the actual lender, capped by Chapter 342. The other is the CAB fee, and that is where almost all of the cost lives.

What a Credit Access Business Actually Is, in Plain English

A CAB is a state-registered middleman. Under Chapter 393 and 7 TAC Chapter 83, Subchapter B, the business is licensed to "obtain, or assist in obtaining" an extension of consumer credit for you from a third-party lender. In practice, that storefront chain you have heard of, the one with the bright sign on the corner, is the CAB. The lender of record is a separate legal entity that the CAB has a relationship with. Your money still comes out of the same drawer. The paperwork is just structured to keep the brokerage fee out of the rate cap.

This is why national articles that say "Texas caps payday loans at 10%" are wrong in any way that matters to a borrower. The cap exists. It just doesn't bind the people you are actually paying.

The Real Math on a $300 Loan, Line by Line

Pull a current Texas fee schedule from any major storefront chain, ACE Cash Express or Check 'n Go will do, and the structure is consistent. Here is what a single-payment, 14-day $300 storefront loan typically looks like:

  • Principal: $300
  • Lender interest at 10% annualized for 14 days: about $1.15
  • CAB fee at roughly $23 per $100 borrowed: about $69
  • Total due in 14 days: about $370
  • Effective APR: roughly 600%

The OCCC's 2024 Annual Report on Credit Access Businesses, published November 6, 2025, shows that single-payment storefront payday APRs in Texas commonly land between 400% and 660% once you annualize the fee plus the interest. Installment CAB loans, which spread the principal across several pay periods, run a little lower per period but compound to even larger totals. The OCCC's 2024 study on consumer loan products puts effective APRs on installment payday loans near 500%. The math behind that annualization is something we walk through end to end in our explainer on how a $15 fee becomes a 391% APR.

Now run the same $300 through a five-month installment CAB transaction with multiple refinances. Total fees can climb past $900 on the same $300 principal. That is not a worst-case scenario. That is what the OCCC's own data shows when a borrower cannot pay in full on the original due date and starts refinancing, which is what CFPB research has found happens to roughly four out of five payday borrowers within 14 days of the first loan.

Why the APR on Your Paperwork Looks "Reasonable" but the Total Doesn't

Read the disclosure box carefully and you will sometimes see two APRs: one for the underlying loan, which obeys the 10% cap, and a much larger combined figure that includes the CAB fee. The 2024 OCCC bulletin on CAB cost disclosure, mandatory at point of sale after September 1, 2024, requires the storefront to give you a total of payments, an APR, and a fee schedule. If the document you signed before September 2024 only showed one number, that is why your final total felt like it came from somewhere else. After September 2024, the larger number should be on the form. Look for it on the page titled something like "Consumer Disclosure" or "Credit Services Agreement."

If the disclosure is missing, that is a complaint to file. More on how, below.

What the OCCC Can and Cannot Do

The OCCC licenses every CAB operating in Texas, examines their books, and can issue cease-and-desist orders, administrative penalties, and injunctions for violations of Chapter 393 or the implementing regulations in 7 TAC Chapter 83. It also runs the consumer complaint portal at the OCCC.

What the OCCC cannot do is cap the CAB fee. That is a job for the legislature. Bills to close the loophole have been introduced in nearly every session for the last decade and have not passed. So when a borrower calls the OCCC and says "this loan is too expensive," the answer is almost always: it may be expensive, but unless the CAB failed to disclose the fee, failed to register, refinanced you in violation of a city ordinance, or did something else procedurally wrong, the price itself is legal.

Knowing that changes how you write a complaint. Don't complain about the rate. Complain about disclosure failures, unauthorized debits, refusal to honor a payment plan you were promised, or a violation of your city's ordinance, all of which can actually move. We walk through the structure of a complaint that gets read in our guide to filing a CFPB complaint that actually gets a response.

City Ordinances That Help

Austin, Dallas, El Paso, Houston, and San Antonio have passed local ordinances that pick up where state law gives up. The specifics vary slightly, but the core rules are similar:

  • Single-payment payday loans capped at 20% of your gross monthly income
  • Installment loans limited to four installments, with no refinances
  • Each installment must reduce the principal by at least 25%
  • CABs operating in city limits must register with the city as well as the state

If you signed a loan in one of these cities and the principal is more than 20% of your gross monthly pay, or if you have been refinanced more than the ordinance allows, you have a complaint that the city itself can act on. Austin posts its registration and complaint process publicly; the other four cities have similar pages buried in their finance or licensing departments. These ordinances have been challenged in court and have generally held up, but enforcement varies. Treat them as a real protection, not a guarantee.

How to Get Out of a Texas Payday Loan Right Now

Texas does not require lenders to offer a no-cost extended payment plan. That is one of the things the state's payday lending statute does not give you. The CFPB's 2022 market snapshot on extended payment plans lists Texas as one of the states where EPPs are optional rather than mandatory. So your first move depends on who you borrowed from.

If your CAB is a member of the Community Financial Services Association of America (CFSA), member rules require an EPP on request, no extra fee, with at least four installments. Ask in writing. If they refuse and they are a CFSA member, that is a complaint to CFSA directly and a strong basis for an OCCC complaint as well.

If they are not a CFSA member, your real options are:

  • Revoke the ACH authorization in writing. Under federal Regulation E, you can stop a recurring electronic debit by notifying the lender and your bank. Do both, in writing, and keep the timestamped copies. The CFPB's payment provisions in 12 CFR Part 1041, effective March 30, 2025, also limit a lender to two failed ACH attempts before they must get fresh authorization from you.
  • Apply for a Payday Alternative Loan (PAL) from a federal credit union. PALs are capped at 28% APR with a $20 application fee, regulated by the NCUA, and many Texas credit unions offer them. See how PAL loans from credit unions actually work.
  • File an OCCC complaint if the CAB violated a disclosure rule, refinanced you in violation of a city ordinance, or charged a fee that does not appear on its filed schedule.
  • Call a HUD-approved credit counseling agency. They can sometimes negotiate a repayment plan the lender would never offer you directly. If you are already three or four refinances deep, the step-by-step exit plan is in our piece on breaking the payday loan rollover cycle.

None of this makes the loan cheap. It just stops the bleeding while you sort out the principal.

Frequently Asked Questions

Is a payday loan legal in Texas?

Yes. The storefront product you walk into is legal under the Credit Services Organizations Act (Texas Finance Code Chapter 393), with the storefront registered as a Credit Access Business with the OCCC. The lender of record is a separate third party operating under Chapter 342.

What is the maximum payday loan APR in Texas?

There is no statutory cap on the combined cost. The lender's interest is capped at 10%, but the CAB fee is uncapped. Real-world effective APRs on single-payment storefront payday loans typically run 400% to 660%, per OCCC 2024 data.

Can a Texas payday lender garnish my wages?

Wage garnishment for consumer debt is prohibited in Texas by Article 16, Section 28 of the Texas Constitution, with narrow exceptions for child support, alimony, taxes, and federally guaranteed student loans. A payday CAB cannot garnish your paycheck. They can sue you, get a judgment, and attempt to seize non-exempt property or levy a bank account, but they cannot touch wages directly.

What happens if my check bounces in Texas?

The CAB can charge a returned-check fee (typically $30) and your bank will charge its own NSF fee. The CAB can re-present the check or ACH debit, but the CFPB's payment rule, effective March 30, 2025, limits them to two failed attempts before they must get new authorization. Criminal "hot check" prosecution for a post-dated payday loan check is prohibited under Texas law (Texas Finance Code 393.201).

Can I get an extended payment plan in Texas?

Texas does not require it by statute. If your CAB is a CFSA member, the trade association's own rules require an EPP on request at no extra cost. If not, you are negotiating from goodwill. Ask in writing, keep the documentation, and escalate to the OCCC if they refuse and your contract or any state or city ordinance gives you that right.

How do I file a complaint against a payday lender in Texas?

File with the OCCC. Include your loan agreement, the disclosure document, payment history, and a clear statement of which rule you believe the CAB violated. If you live in Austin, Dallas, El Paso, Houston, or San Antonio, also file with the city's regulatory office. For unauthorized ACH debits, file separately with the CFPB.