Borrowers are often surprised to learn there is no answer to the question ‘what is the maximum rate in Texas?’. Understanding why Texas has no payday loan cap matters practically, not just historically: it tells you which protections you actually have, which ones you do not, and where to look for the ones that exist.
Quick answer: Texas Finance Code Chapter 393 states that nothing in it grants the Finance Commission or the Office of Consumer Credit Commissioner authority to limit the fees a credit access business charges. The absence of a cap is written into the statute. Around fifty cities, El Paso included, responded with local ordinances that cap loan size and rollovers instead.
A cap that was never delegated
Most states cap short-term loan costs in one of two ways: a hard rate ceiling in statute, or authority handed to a regulator to set one. Texas did neither.
Short-term lending here runs through the Credit Access Business model in Chapter 393 of the Finance Code. A CAB brokers and guarantees a loan made by a third-party lender, and charges a fee for that service. The lender’s interest is constrained by Chapter 342. The CAB’s fee is constrained by nothing — the statute contains an explicit sentence saying that neither the Finance Commission nor the OCCC is granted authority to set a limit on it.
That phrasing matters. A regulator cannot cap a fee it was never given power to cap, no matter how high the fee goes. Complaints about price alone are therefore outside the OCCC’s reach, which is why the agency’s rulemaking concentrates on licensing, disclosure and recordkeeping instead — it posted amendments to exactly those CAB rules on 15 July 2026.
What that means in dollars
With no ceiling, price is set by what the market will bear. Fees in the $15 to $25 per $100 borrowed range are common for a two-week advance, which produces effective APRs of roughly 390% to 650%. Figures in the 300% to 660% band are routinely reported for Texas.
| Borrowed | Typical fee, 14 days | Repay | Approx. APR |
|---|---|---|---|
| $300 | $45 to $75 | $345 to $375 | 390% to 650% |
| $500 | $75 to $125 | $575 to $625 | 390% to 650% |
| $800 | $120 to $200 | $920 to $1,000 | 390% to 650% |
Illustrative; your written disclosure governs. The pattern to notice is that the APR does not fall as the loan gets bigger, because the fee scales with the amount. Borrowing more does not buy a better rate here the way it might on an installment loan.
What filled the gap instead
Because the Legislature left price and size alone, Texas cities acted individually. Around fifty adopted a common model ordinance — among them El Paso, Austin, Dallas, San Antonio and Houston.
El Paso’s version is Chapter 5.17 of the Code of Ordinances, in force since 8 January 2013. It does not touch price either. What it does is cap the size of the loan at 20% of your gross monthly income, cap a motor-vehicle title loan at 70% of the vehicle’s retail value, limit repayment to no more than four installments or three renewals with each retiring at least 25% of principal, and require the business to register with the City and keep three years of records for inspection.
The effect is a debt with a ceiling tied to what you earn and a guaranteed end date. That is a genuinely different product from an uncapped, indefinitely renewable loan — even though the price per dollar is identical.
Why reform keeps stalling
Bills to impose a statewide rate cap have been filed in multiple Texas legislative sessions. None has become law. The arguments on each side are worth knowing because they shape what you are likely to see next.
- Against a cap: that a ceiling low enough to matter would remove small-dollar credit from the market entirely, pushing borrowers to unlicensed or offshore operators with no disclosure duty at all.
- For a cap: that states with 36% ceilings still have small-dollar credit, largely through credit unions and licensed installment lenders, and that the current structure recycles the same borrowers through repeat fees.
What has not stalled is the local layer. The ordinance count has grown steadily, and the practical consequence is a patchwork: identical loans carry different limits on either side of a city line. If you are told Texas recently capped payday rates, someone is describing a bill rather than a statute. Check the OCCC’s published rules, not a lender’s summary.
How Texas compares
Placing Texas next to other states makes the structure easier to see.
- States with a hard ceiling typically set 36% APR all-in. Small-dollar credit still exists there, mostly through credit unions and licensed installment lenders, though storefront payday lending largely does not.
- States with a moderate cap allow payday lending at a regulated fee per $100, often with a state system preventing simultaneous loans.
- Texas has neither, and instead layers a broker structure over an uncapped fee, with the only quantitative limits coming from individual cities.
This is why national articles about payday loans are frequently wrong for Texas readers. A guide describing a state tracking system, a fee schedule per $100 or a statutory rollover limit is describing somewhere else. In El Paso the numbers that bind you come from Chapter 5.17 of the City Code, not from Austin.
What you can do with this
Knowing there is no cap changes how you shop, in three concrete ways.
- Compare total dollar cost, never rate. Since price is unregulated, it genuinely varies between licensed businesses. Two offers on the same $500 can differ by $50 or more. Ask each for the total you will repay and the date.
- Use the protections that do exist. The written disclosure, the next-business-day cancellation window, the bar on criminal charges for non-payment, and in El Paso the 20%-of-income ceiling are all enforceable.
- Price a capped product first. Federal credit unions can offer Payday Alternative Loans capped at 28% interest; GECU and First Light Federal Credit Union both serve the El Paso metro. Covered service members at Fort Bliss have a 36% MAPR ceiling under the Military Lending Act. Those caps exist because someone else legislated them.
Frequently asked questions
No. Finance Code Chapter 393 specifically states that neither the Finance Commission nor the OCCC is granted authority to limit credit access business fees, so there is no ceiling to enforce.
Licensing, disclosure, recordkeeping and conduct. It licenses every credit access business, requires a written fee disclosure before you sign, investigates complaints and takes enforcement action — but it cannot set prices.
No. El Paso’s Chapter 5.17 and the roughly fifty similar ordinances cap loan size, repayment structure and renewals. They limit how much you can borrow and how long the debt can run, not what it costs per dollar.
Bills have been filed repeatedly and none has become law. Treat any claim that a statewide cap now exists as describing proposed legislation until you can find it in the OCCC’s published rules.
Credit unions are the practical answer. Federal credit unions can offer Payday Alternative Loans capped at 28% interest, and covered service members and dependants are protected by the Military Lending Act’s 36% MAPR ceiling.
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.