Texas Personal Loan Laws — What Borrowers Must Know
MC
Maria Castillo
Certified Credit Counselor (NFCC), Financial Literacy Educator · Updated April 2026
Maria Castillo
Certified Credit Counselor (NFCC), Financial Literacy Educator · Updated April 2026
The Texas Finance Code is the primary body of law governing personal lending in the state. It establishes who can lend money to Texas consumers, what rates and fees they can charge, and what disclosures they must provide. Understanding this framework helps you identify whether a lender is operating legally and whether the terms you are offered are reasonable.
The Finance Code is organized into several titles, with Title 4 (Regulation of Interest, Lenders, and Lending) being most relevant to personal loan borrowers. Within Title 4, different chapters cover different types of lenders and products.
Chapter 301 establishes general interest rate provisions. Texas has a default usury limit of 10 percent per year for most consumer transactions, but this baseline rate is superseded by the specific provisions in later chapters that authorize licensed lenders to charge higher rates.
Chapter 342 governs regulated installment lenders — the traditional direct lenders who fund loans from their own capital. These lenders must be licensed by the OCCC and follow tiered rate ceilings based on loan size. This chapter provides the most borrower-friendly framework for installment lending in Texas.
Chapter 393 covers Credit Access Businesses, which broker loans between consumers and third-party lenders. While the underlying loan rates are subject to standard limits, the brokerage fees CABs charge are not capped, creating the potential for very high total borrowing costs.
The Finance Code also establishes licensing requirements, requiring lenders to meet financial responsibility standards, maintain adequate records, and submit to periodic examinations by the OCCC. Operating without a license is a criminal offense in Texas, providing consumers with a clear way to identify legitimate lenders.
Texas has specific rules for interest rates and fees that depend on the lender type, loan amount, and how the loan is set up. Here's a clear look at what Texas law permits.
For regulated lenders under Chapter 342: Interest rates have different limits depending on the loan size. Lenders can charge up to 30 percent annual interest on the first $500 of the principal. For amounts between $500 and $1,000, the limit goes down to 24 percent. Loans from $1,000 to $1,800 have a maximum rate of 18 percent. Any loan over $1,800 is also capped at 18 percent for the full amount. These limits cover all costs and offer good protection.
For bank and credit union lenders: Banks and credit unions with federal charters can often use their own rates because of federal law, instead of following state caps. However, competition usually keeps their rates fair, and they still have to follow federal rules protecting consumers.
For Credit Access Businesses: The loan itself from the third-party lender follows normal rate limits, but the CAB’s service fee is separate. Texas requires CABs to show all fees, but doesn't limit how much they can charge for their services. This difference in regulation allows the total cost of a loan – the APR – to be very high, sometimes hundreds of percent.
Origination fees: A lot of Texas lenders charge origination fees between 1 and 8 percent of the loan amount. These are usually taken out of the money you borrow, so you don’t get the full amount. Texas law requires lenders to clearly explain these fees, and for regulated lenders, they're included in the rate limits.
Late payment fees: Lenders in Texas can charge late fees if they are reasonable and explained in the loan agreement before you sign. Many lenders give a 10- to 15-day period before adding any charges.
Texas offers several consumer safeguards that are better than those in most other states. These can really help people who take out personal loans, even if they have trouble with repayment.
Homestead protection is a key part of Texas law for consumers. Your main home is protected by the state constitution from most creditors, including personal loan companies. If you don’t pay back an unsecured personal loan, the lender can't force you to sell your house to cover the debt. This applies no matter how much your home is worth and doesn't have a limit—something that makes Texas different from states with lower homestead exemptions.
Wage garnishment restrictions in Texas are among the toughest in the country. Generally, Texas law prevents creditors from taking money out of your paycheck to pay off debts like personal loans. There are exceptions for things like child support, student loans, taxes, and court orders, but private lenders can’t directly take funds from your earnings. This is a valuable safety net that many borrowers in other states don't have.
Vehicle protection under Texas law lets you keep one vehicle per licensed driver in the household safe from creditors, regardless of its value. So, your car or truck is usually protected from personal loan lenders.
Personal property exemptions shield up to $50,000 worth of possessions for individuals ($100,000 for families) from creditor claims. This includes things like furniture, clothes, work tools, sports gear, and other belongings.
The statute of limitations on consumer debt in Texas is four years. After four years without a payment or written confirmation of the debt, creditors no longer have the legal right to sue you for it. However, the debt can remain on your credit report for up to seven years, and creditors might still try to collect it voluntarily.
These protections don’t mean you should borrow money carelessly. Missing payments on a personal loan will still hurt your credit score, lead to collection attempts, and cause worry. But understanding your rights gives you peace of mind and can help when facing financial problems.
If a lender has violated your rights, charged unauthorized fees, or engaged in deceptive practices, you have several avenues for seeking resolution in Texas.
Start with the lender directly. Many issues can be resolved through the lender's customer service or complaints department. Document everything in writing — send an email or letter rather than relying on phone conversations. Clearly state what happened, reference specific terms from your loan agreement, and request a specific resolution. Keep copies of all correspondence.
File with the OCCC. The Office of Consumer Credit Commissioner is the primary regulator of consumer lending in Texas. File a complaint online at occc.texas.gov, by phone at 800-538-1579, or by mail. The OCCC investigates complaints against licensed lenders and can take enforcement actions including fines, license suspensions, and orders to refund improper charges. Include copies of your loan documents, payment records, and any communication with the lender.
Report to the Consumer Financial Protection Bureau (CFPB). The CFPB is the federal consumer protection agency for financial products. Filing at consumerfinance.gov creates a record that the CFPB uses to monitor lending practices nationally. The CFPB can also compel lenders to respond to your complaint within 15 days.
Contact the Texas Attorney General. The AG's Consumer Protection Division handles complaints about deceptive business practices, including fraudulent lending. File at texasattorneygeneral.gov or call 800-621-0508. While the AG's office typically does not resolve individual disputes, patterns of complaints against a lender can trigger investigations.
Consult a consumer protection attorney. For significant financial harm — unauthorized fees totaling hundreds or thousands of dollars, illegal collection practices, or identity theft related to a loan — a consumer protection attorney can evaluate whether you have a legal claim. Many work on contingency, meaning you pay nothing unless you recover money. The Texas State Bar's lawyer referral service at texasbar.com can help you find qualified attorneys in your area.
Texas lending regulations continue to evolve as legislators and regulators respond to changing market conditions and consumer needs. Here are the most significant recent developments that affect personal loan borrowers in 2026.
Municipal CAB ordinances have expanded. Following the lead of Austin, Dallas, San Antonio, and Houston, several additional Texas cities have adopted local ordinances regulating Credit Access Businesses. These ordinances typically limit the size of CAB loans relative to borrower income, restrict the number of refinances or rollovers, and require that each payment reduce the principal by at least 25 percent. While the statewide legislature has not enacted similar caps, the city-level regulations provide meaningful protections in major population centers.
Enhanced disclosure requirements. The OCCC has implemented updated disclosure rules requiring lenders to present loan costs in a more standardized, consumer-friendly format. The new rules mandate that lenders clearly state the total amount the borrower will repay, expressed as both a dollar figure and a percentage of the original loan amount. This makes it easier to compare offers across different lender types.
Digital lending regulations. As more Texans apply for loans online, the OCCC has clarified that all online lenders serving Texas residents must be licensed in the state. This addresses a gray area where some out-of-state online lenders were offering loans to Texans without proper licensing. Borrowers should verify that any online lender they use holds an active Texas license.
Military lending protections. Texas has significant military populations around bases like Fort Cavazos, Joint Base San Antonio, and Fort Bliss. Federal Military Lending Act protections cap APRs at 36 percent for active-duty service members and their dependents, overriding Texas's more permissive state-level allowances. The OCCC actively enforces these protections for Texas-based military families.
Stay current on Texas lending law changes by checking the OCCC website regularly and reviewing any notices your lender sends about term changes. Being an informed borrower is your best protection in a state with a complex and evolving regulatory picture.