Installment Loans in Texas and What State Law Allows

Can a Texas lender charge whatever it likes on a small installment loan? Not if the loan is made under Chapter 342 of the Texas Finance Code. That law sets rate tiers, fee caps and maximum terms, and the Office of Consumer Credit Commissioner (OCCC) licenses and supervises the lenders who use it.

The catch is that many of the most expensive small loans in Texas are not made under Chapter 342 at all. Everything below is as of September 27, 2026.

Texas generally caps interest at 10% a year. Chapter 342 is the exception that lets a licensed lender charge more. In exchange, the lender accepts OCCC oversight. The statute is direct about where it starts: "A loan providing for a rate of interest that is 10 percent a year or less is not subject to this chapter" (§342.004).

Above that line, the law sets these limits:

• Administrative fee. §342.201 caps it at $20 on loans of $1,000 or less and $25 on larger loans. The fee is non-refundable. A lender can generally charge it again on a refinance only once every 180 days.
• No other charges. §342.502 bars any charge the chapter does not authorize. The only extras it allows are items such as lien filing fees, authorized insurance and a capped returned-check fee.
• Maximum term. §342.508 ties the longest allowed term to the size of the loan.

The rate tiers below come from an industry compliance resource, Small Loan Software, not from the statute text. Treat them as a guide and confirm them with the OCCC. Rates on loans above $2,500 follow Chapter 303 ceilings instead, which the OCCC publishes in its weekly Texas Credit Letter.

Most Texas payday and title loans go through a credit access business (CAB). A CAB is a company that does not lend money itself. Instead, it arranges and guarantees a loan from a separate lender, and it charges its own fees for doing so.

The Secretary of State registers these companies as credit services organizations. However, it acts only as a filing officer and does not regulate what they charge. Since January 1, 2012, CABs have also needed an OCCC license.

One industry compliance blog cites APRs of 600% or more under this model. The state law library notes that Austin, Dallas, Houston, San Antonio and El Paso have their own ordinances, which add limits beyond state law. The CAB route is covered in more detail on our page about payday loans in Texas.

The sources here do not say whether lenders in Texas also use bank partnerships or tribal status to avoid the cap. That remains unanswered.

A lender charging more than 10% generally needs an OCCC Regulated Lender License. Since January 1, 2026, those licenses have been handled through the Nationwide Multistate Licensing System (NMLS). The sources do not set out separate rules for online lenders.

On any offer, look at the disclosures. If the lender is a CAB, it should hold an OCCC license. The sources also do not name credit union alternative loans or Texas assistance programs, so ask your own credit union what small loans it offers.

A new installment loan is new debt. Its monthly payments will show up as recurring debits on the bank statements you give your lender. Expect the underwriter to ask about it, possibly in a written letter of explanation. Also expect the payment to count against your debt-to-income ratio, which is the share of your monthly income that goes to debt payments.

Paying the loan off early is allowed without penalty, according to Small Loan Software. The administrative fee and any acquisition charge are not refunded, though. Before you take a loan out or pay one off mid-file, ask your loan officer how it will affect the approval.