13 Jun 2016   /   0 comments

Car Title Loan Laws and Regulations

If you’ve ever considered getting an auto title loan, you already know that these short-term loans can be very beneficial for someone who needs cash right away, but doesn’t have the best credit score. All you need to obtain a title loan is, usually, a valid driver’s license, and the title to a car, truck, boat, RV, or some other motorized vehicle. But while you probably researched the interest rates, loan terms, and title loan alternatives common in your area, you may not have considered the laws and state regulations surrounding title loans in your area.

Basic Legality

Depending on the state, county, or even specific town that you live in, the exact laws that govern title laws can be different. While some states cap the interest rate that an auto title lender can levy, for example, other states don’t have any such laws in place. In order to understand the laws surrounding Car Title Loans better, let’s start with the most basic level: federal law.

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According to the federal government, Car Title Loans are legal unless explicitly prohibited by the state. Until very recently, that sentence really summed up the entirety of the federal-level interest in Car Title Loans. Title loans were regulated solely by state law, with the underlying notion that they were legal according to federal law, if the state allowed them. However, in recent months, Car Title Loans, have been the subject of focus at the federal level. The Consumer Financial Protection Bureau is not planning to make title loans illegal; however, there are new laws being discussed to ensure that title lenders are only loaning to borrowers who can afford to repay their loans. There has been discussion of creating a governing agency that title lenders will have to report to periodically to ensure that consumers are protected.

State Laws

Once you understand the laws on the federal level, you can begin to look at how your state specifically handles title loans. Here are the basic laws you need to know for each state, so that you can begin your own investigation into the legality and regulations of Car Title Loans in your area.

  • Alabama: Car Title Loans are legal in Alabama, and there is no regulation regarding the amount that consumers may borrow. Loan terms may not be less than 10 days.
  • Alaska: Alaska does not permit auto title lenders to operate within the state.
  • Arizona: Title loans are legal in Arizona, and there is no regulation regarding the amount that consumers may borrow. Loan terms may not be less than six days, and the interest rate may not be higher than 17%.
  • Arkansas: Arkansas does not permit auto title lenders to operate within the state.
  • California: Title loans are legal in California, and consumers must borrow more than $2,500. Loan terms and APR caps differ depending on the amount borrowed, with the maximum APR being 30%.
  • Colorado: Colorado does not permit auto title lenders to operate within the state.
  • Connecticut: Connecticut does not permit auto title lenders to operate within the state.
  • Delaware: Car Title Loans are legal in Delaware, and there is no regulation regarding the amount that consumers may borrow. Loans cannot exceed 180 days, including roll-overs.
  • Florida: Florida does not permit auto title lenders to operate within the state.
  • Georgia: Car Title Loans are legal in Georgia, and there is no regulation regarding the amount that consumers may borrow. Loan terms are also not regulated, but the interest amount cannot ever exceed 25%.
  • Hawaii: Hawaii does not permit auto title lenders to operate within the state.
  • Idaho: Car Title Loans are legal in Idaho, and there is no regulation regarding the amount that consumers may borrow. Loan terms may not be more than 30 days.
  • Illinois: Car Title Loans are legal in Illinois, and consumers may borrow up to $4,000, or up to 50% of their monthly income. Loan terms are not regulated, but borrowers are only allowed one renewal per the state laws.
  • Indiana: Indiana does not permit auto title lenders to operate within the state.
  • Iowa: Iowa does not permit auto title lenders to operate within the state.
  • Kansas: Car Title Loans are not legal in Kansas; however, auto title lenders can extend loans as “open ended credit”, with no cap on the amount that a borrower can be loaned. These types of open-ended credit loans must carry interest between 264 and 360%, in order to avoid certain caps.
  • Kentucky: Kentucky does not permit auto title lenders to operate within the state.
  • Louisiana: Car Title Loans are legal in Louisiana, and consumers must borrow more than $350. Loan terms are generally around two months, and carry an APR of 36%.
  • Maine: Maine does not permit auto title lenders to operate within the state.
  • Maryland: Maryland does not permit auto title lenders to operate within the state.
  • Massachusetts: Massachusetts does not permit auto title lenders to operate within the state.
  • Michigan: Michigan does not permit auto title lenders to operate within the state.
  • Minnesota: Minnesota does not permit auto title lenders to operate within the state.
  • Mississippi: Car Title Loans are legal in Mississippi, and borrowers may not be lent more than $2,500. Loan terms may not exceed one month unless the borrower plays at least 10% of the principle. Interest is capped at 25%.
  • Missouri: Car Title Loans are legal in Missouri, and borrowers may not be lent more than $5,000. There are no regulations regarding loan terms or interest rates.
  • Montana: Montana does not permit auto title lenders to operate within the state.
  • Nebraska: Nebraska does not permit auto title lenders to operate within the state.
  • Nevada: Car Title Loans are legal in Nevada, and the loan may not exceed the market value of the vehicle. There are no regulations on loan terms or interest rates, but borrowers may only renew a loan six times.
  • New Hampshire: Car Title Loans are legal in New Hampshire, and borrowers may not be lent more than $10,000. The APR is capped at 25%, and borrowers are allowed up to 10 renewals.
  • New Jersey: New Jersey does not permit auto title lenders to operate within the state.
  • New Mexico: Car Title Loans are legal in New Mexico, and loans are capped at $2,500. There are no regulations on terms or interest rates.
  • New York: New York does not permit auto title lenders to operate within the state.
  • North Carolina: North Carolina does not permit auto title lenders to operate within the state.
  • North Dakota: North Dakota does not permit auto title lenders to operate within the state.
  • Ohio: Ohio does not permit auto title lenders to operate within the state.
  • Oklahoma: Oklahoma does not permit auto title lenders to operate within the state.
  • Oregon: Oregon does not permit auto title lenders to operate within the state.
  • Pennsylvania: Pennsylvania does not permit auto title lenders to operate within the state.
  • Rhode Island: Rhode Island does not permit auto title lenders to operate within the state.
  • South Carolina: Car Title Loans are legal in South Carolina, and loans must be greater than $2,500. There are no regulations on terms or interest rates.
  • South Dakota: Car Title Loans are legal in South Dakota, and there is no regulation regarding the amount that consumers may borrow. Loan terms may not exceed 30 days, and borrowers are allowed up to four renewals.
  • Tennessee: Car Title Loans are legal in Tennessee, and loans cannot be in excess of $2,500. Costs and interest rates are regulated, with only one fifth of the total loan amount being allowed for total costs, and only 2% interest being allowed each month.
  • Texas: Car Title Loans are legal in Texas, and there is no regulation regarding the amount that consumers may borrow. Loan terms may not exceed 180 days, and the interest rate is capped at 10%.
  • Utah: Car Title Loans are legal in Utah, and there is no regulation regarding the amount that consumers may borrow. Loan terms and interest rates are not regulated.
  • Vermont: Vermont does not permit auto title lenders to operate within the state.
  • Virginia: Car Title Loans are legal in Virginia, and loans cannot exceed 50% of the fair market value of the car. Loan terms and interest rates are highly regulated and specific to each district within the state.
  • Washington: Washington does not permit auto title lenders to operate within the state.
  • West Virginia: West Virginia does not permit auto title lenders to operate within the state.
  • Wisconsin: Car Title Loans are legal in Wisconsin. Loans must be no more than 50% of the value of the car, or up to $25,000, whichever is less. Loan terms may not be more than six months.
  • Wyoming: Wyoming does not permit auto title lenders to operate within the state.

Before you sign an auto title loan agreement, be sure that you have investigated the laws in your area so that you know exactly what is and isn’t legal. If you choose the best auto title lender, you’ll have no problems turning an auto title into the fast cash you need to take care of a financial emergency, and get back on your feet quickly.

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