A client of mine and I are seeking opinions on the 180 day limit on CAB multi-payment auto title loans Per Texas Finance Code Chapter 393.201 (Form and Terms of Contract) and Chapter 393.001 (3).

Chapter 393.201 states that a credit service contract is between a CSO-CAB and a consumer, and that the services to be performed under that contract listed under 393.001 (3) must be completed within 180 days.  Many operators interpret this rule simply, and say “this means we can’t participate in multi-payment loans for more than 180 days.”

But, my client is thinking that the promissory note component of the contracts is between the Third Party Lender and the consumer, is not related to the rules just cited, and so 393.201 should not apply.

Why?  The client’s CSO-CAB services to the customer are almost all completed on day 1 of the loan.  After that such services as taking payments on the loan, forwarding the payments to the lender, and guaranteeing the loan, are services provided by the CSO-CAB to the lender, and not the consumer.  So, again 393.201 should not apply because these are not the service listed under 393.001 (3).  The service of assisting and obtaining loans for the consumer as per the credit service contract are done well within the 180 days.

#1 priority for client is to abide by the rule of the law…please provide your comments on this we are seeking OCCC and industry opinion.

There are many benefits to my client and the consumer for loan programs that are beyond 180 days.  Let’s dig a little on this.

As always, check in with Michael Brown via email at cabconbrokerage@gmail.com or call 214-293-8676.