How to Read a Texas CAB Fee Disclosure

In a state with no fee cap, the written disclosure is the single most useful document you will be handed. A Texas CAB fee disclosure is required before you enter the agreement, and it is the only place the real price appears in a form you can compare against another offer.

The four lines that matter

Layouts differ between businesses, but every compliant disclosure carries the same four figures. Find them before you read anything else.

If a business quotes you a rate but will not produce this document in advance, that is not a negotiating position — the disclosure is required before the agreement, and withholding it is grounds for an OCCC complaint.

Why the APR looks nothing like the interest rate

This is the part that confuses most borrowers, and it is not an accident of presentation. Texas splits short-term lending in two: a third-party lender advances the money at an interest rate limited by Finance Code Chapter 342, and a credit access business brokers and guarantees the deal for a fee that Chapter 393 expressly leaves uncapped.

Worked through on a $500 advance for fourteen days:

• Interest at roughly 10% annualised: a little under $2.
• CAB fee at $20 per $100: $100.
• Total cost of credit: about $102.
• Total of payments: about $602.
• APR: in the mid-500s.

The interest line contributed under 2% of what you paid. So when a storefront describes the product by its interest rate, it is quoting the smaller of two numbers. The APR on the disclosure is the honest figure, and it is required to be there.

Checks specific to El Paso

Chapter 5.17 of the El Paso Code adds limits the disclosure should reflect. Run these four before you sign:

1. Amount against the income cap. Twenty per cent of gross monthly income. On $2,800 a month that is $560. Ask which pay documentation was used and for which period.
2. Payment count. No more than four installments. A schedule showing five or more does not match the ordinance.
3. Principal reduction. Each installment or renewal must retire at least 25% of principal. Add up the schedule and confirm the balance actually falls.
4. Title loans. If a vehicle is involved, the advance is capped at 70% of its retail value.

The business must keep the records behind all of this for at least three years and produce them for City inspection, so a discrepancy is provable later even if you only spot it after the fact.

Charges that appear after signing

The disclosure covers the loan as agreed. Several costs can arrive later and it is worth knowing which are legitimate and which are not.

• Returned-payment charges. If a debit fails, both the business and your own bank may charge. The bank fee is separate from the loan entirely and often the larger of the two.
• Renewal fees. Generally a fresh CAB fee each time. Ask for the renewal cost in dollars before you need it, not on the due date.
• Collection costs. Only to the extent the agreement provides for them. Read that clause.
• Anything not in the agreement. A charge the document does not support is exactly the kind of complaint the OCCC can act on.

Keep an eye on the account the debits come from as well. Two failed attempts in the same week can produce two bank fees on top of the loan, which is how a manageable shortfall turns into a larger one. If money is going to be tight on the due date, call before it rather than after — businesses have far more flexibility with advance notice.

Questions worth asking at the counter

Short, specific questions get better answers than general ones.

• What is the total I will repay, and on exactly what date?
• What is the fee if I renew once? Twice?
• How was my maximum calculated, and from which pay stub?
• What happens if my payment is returned unpaid — what does that add?
• Can I pay this off early, and does that reduce the fee?
• Are you registered with the City of El Paso as well as licensed with the OCCC?

Take the disclosure home before deciding. A business that discourages you from leaving with it is telling you something useful about the offer.

Comparing two offers properly

Put both disclosures side by side and compare exactly one number: total of payments for the same amount financed over the same term. Everything else — the rate, the fee structure, the marketing — is noise for this purpose.

Then compare that figure against a capped product. A federal credit union Payday Alternative Loan is limited to 28% interest, and GECU and First Light Federal Credit Union both serve the El Paso metro. Covered service members and dependants at Fort Bliss have a 36% MAPR ceiling under the Military Lending Act. The gap between those numbers and a typical CAB total is usually large enough to justify a day’s delay.

Keep every disclosure you are given. If a charge later appears that the document does not support, that piece of paper is what turns a dispute into a complaint the OCCC can act on.

This article is educational and is not financial or legal advice. Before you borrow, confirm the business is licensed with the Texas Office of Consumer Credit Commissioner (OCCC) and registered with the City of El Paso, and read the fee disclosure in full.