Title Loan Laws by Different States
Over the past decades, title loans have become a popular type of finance in several states. This line of credit allows a borrower to get a loan against his vehicle title which serves as collateral. Instead of doing a background credit check, the lenders examine the value and condition of the vehicle before deciding on the amount of borrowing. To safeguard his interest, the lender places a lien on the car title. In case of timely repayments, the creditor hands over the car title back to its original owner. However, default on payment grants the right of repossession to the lender which enables him to pay off the outstanding debts from the vehicle’s sale proceeds. But every state has its own rules and regulations governing the title loan laws. For instance, Alabama and Georgia state laws permit lenders to keep the surplus sale proceeds in addition to paying off the complete loan. While in other states, title loan laws operate differently. Some states outrightly prohibit the title loan laws whereas others have moderate restrictions about title loans. Thus, having prior knowledge of the governing state laws is imperative for borrowers as well as lenders. Find below a list of title loan laws that will help you better understand the regulations in various states around the world.
States that Strictly Prohibit Title Loans
If you reside in one of the following states, be wary. These states have banned title loans in any form. But you have an option to reach out to credit companies that can work out legal methods to help you acquire title loans. In some cases, the lenders are willing to offer an Annual Percentage Rate lower than 300 % under this category. Alaska, Florida, Hawaii, Indiana, Maine, Montana, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Maryland, North Carolina, Washington, West Virginia and more have stringent laws restricting title loans.
On the other hand, the legal framework in Kansas, South Carolina, California, and Louisiana makes it possible for lenders to offer title loans through the prevailing loopholes. South Carolina and California have laid separate regulations to outlaw the title loans. The states disallow interest value below a threshold limit for every kind of loan. While in Kansas, more restrictive laws are in practice that make title loans illegal. However, lenders can avoid this regulation through proper restructuring of the title loans. There are more ways to avail title loans in states like these. All you need is a legal expert who can lead you through every step of the process.
States with Easy Access to Title Loans
Several states have introduced laws that support title loans at large. It means that the states have no modest restrictions in place that encourage numerous title loan lenders and borrowers to engage with each other. To name some states, Alabama, Arizona, Delaware, Georgia, Idaho, Illinois, Missouri, New Hampshire, New Mexico, South Dakota, Texas, Virginia, Tennessee are the best states for availing title loans.
States with No Cap on Title Loans
The following states have laws that are beneficial for lenders as they have not set any limitations on the maximum limit of the loan value and interest rate. Delaware, Idaho, Illinois, Missouri, Nevada, New Mexico, South Dakota, Utah, Wisconsin are states that fall into this category. To give a few examples: In Illinois, the rate of interest can go up as much as 36 percent while the title lending laws in Texas regulate the loan duration to a period of 180 days or 6 months. Utah’s title loans are flexible which makes it an ideal state for title loans. Virginia’s laws prevent local lenders from providing auto car loans to working service members on duty.
Whether you are one first borrower or have an outstanding credit score in the past, understanding the title laws applicable to the state you live in is a must. You can consult a financial adviser for getting a better idea about what works and what does not work for you as per your financial requirements.