Texas Loan Rules

Every small-dollar loan rule that applies to borrowers in Texas is set by state statute and enforced by TX OCCC across storefront and online lenders. Short-term deferred presentment transactions—commonly known as payday loans—are legal and regulated under the Texas Credit Services Organization Act, and borrowers must be at least 18 years old. Permitted repayment terms run between 7 days and 180 days, and specific rules on rollovers, simultaneous loans, and your right to cancel (rescission) appear in the payday table below. A typical payday loan in Texas carries an annual percentage rate of ~662%+.

Fixed-payment installment loans in Texas are governed separately under the Texas Finance Code Chapter 342 (Consumer Loans), which regulates multi-month loans repaid in scheduled installments. As shown in the installment table below, the maximum all-in APR is 116% on a $500 six-month loan, 35% on a $2,000 two-year loan, and 26% on a $10,000 five-year loan. Online lenders making small loans to Texas residents generally must hold a license from TX OCCC and follow these statutory limits. Before borrowing, you can compare lower-cost regulated alternatives such as credit union Payday Alternative Loans (PALs), which cap rates at 28% APR for loans from $200 to $2,000, and explore our detailed Texas guides and lender directories linked on this page.

1. Verify the lender's license in Texas. Confirm that the lender holds an active state license with TX OCCC before sharing your bank account details or signing an agreement. You can also look up the company on NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type.
2. Check the Truth in Lending disclosure box. Under the federal Truth in Lending Act and Regulation Z, every lender must give you a written disclosure showing the APR, finance charge, amount financed, and total of payments before you sign the contract.
3. Compare the all-in APR and origination fee to state caps. Make sure the contract's all-in APR and any origination fee stay within the Texas limits shown in the tables above, such as 116% on a $500 six-month installment loan under the Texas Finance Code Chapter 342 (Consumer Loans). Covered active-duty servicemembers and their dependents are protected by the federal Military Lending Act, which caps covered credit at 36% Military APR.
4. Review your right to cancel and payment stop protections. Check the payday table above to see how rescission (your right to cancel a loan shortly after signing) works in Texas. If you set up recurring electronic bank debits, federal Regulation E lets you stop preauthorized withdrawals by notifying your bank at least 3 business days before the scheduled debit, though this does not cancel the debt.
5. Check credit union Payday Alternative Loans (PALs). Before taking a higher-cost non-bank loan, see if you qualify for membership at a credit union in Texas. Under NCUA rules, federal credit union PALs offer $200 to $2,000 for 1 to 12 months with a maximum 28% APR and an application fee of up to $20.

Lenders offering payday or installment loans over the internet to residents of Texas generally must obtain a state license from TX OCCC and comply with the rate, fee, and term limits in the Texas Credit Services Organization Act and the Texas Finance Code Chapter 342 (Consumer Loans). You can verify whether an online company is a licensed lender by checking directly with TX OCCC or by searching NMLS Consumer Access (nmlsconsumeraccess.org), though not every state uses NMLS for every license type. Some online lenders claim affiliation with a federally recognized tribe and assert that tribal sovereign immunity exempts them from Texas licensing and usury caps. Federal appeals courts have reached different results when reviewing tribal lending immunity: several decisions (2nd Circuit in 2014 and 2019, 4th Circuit in 2021, and 7th Circuit in 2021) supported states and the CFPB, while one decision (4th Circuit in 2019) found a lender protected by immunity.

If a lender operating in Texas charges more than the statutory cap, lends without a required state license, ignores your right to cancel, or uses unlawful collection tactics, save copies of your loan contract, Truth in Lending disclosures, and payment records. You can submit a formal complaint to TX OCCC in Texas and to the federal Consumer Financial Protection Bureau (CFPB) at consumerfinance.gov. Be aware that no lender or debt collector can have you arrested or jailed for an unpaid consumer debt.