What States Allow You To Get A Title Loan?
Not all states in America allow title loans. And trying to find out which ones do proved difficult, trust me. But after a lot of thorough and diligent research, we have found which states allow them, which don’t, and which have restrictions that others don’t. We’ll give relevant information and even the statutes that dictate these loans under each state.
States That Allow Title Loans
The first list shows which states primarily allow title loans without restrictions or falling under some other legal umbrella. There may be caps on interest rates in this first list. But mostly, title loans work as they were designed in these states, as short-term loans to provide cash for an unexpected expense.
Alabama allows title loans and provides statutes for them under the Alabama Pawnshop Act. Title loans in this state are capped at 25% a month interest rate with a one-month time limit. In the case of repossession and sale of the vehicle on default, title loan originators are permitted to keep any surplus over the deficiency balance.
The state of Arizona allows title loans under the Motor Vehicle Time Sales Disclosure Act. The interest rate caps vary depending on the loan amount. Arizona allows 17% per month on loans $500 or less. Lenders can only charge 15% per month on loans between $501-$2,500. That cap drops further to 13% per month on loans between $2,501-$5,000. And finally, they can only charge 10% per month on loans of more than $5,000. If they repossess and sell a vehicle, any surplus goes to the buyer.
Delaware regulates title loans under Delaware Code Title 5. No interest rate cap exists but loans can only be extended to 180 days, including any rollovers. Borrowers receive any surplus following repossession and sale of the vehicle in question. The lender can only recover any deficiency balance.
The Pawnbroker Law governs title loans in the state of Georgia. Interest rates are limited to 25% a month for the first three months of any title loan. The cap falls to 12.5% after that, plus any applicable lien fees. Loan terms are limited to 30 days with the option to extend. Lenders can keep any surplus following a repossession and sale.
The law pertaining to title loans falls under Idaho Code Ann. § 28-46-501 to 509. (As a side note, there seems no clear answer as to what Ann. stands for in that legal code, other than maybe annotated?) A loan can only offer as much as the retail value of the vehicle in question and there is no cap on the interest rate. A borrower receives any surplus in the case of any repossession and sale of the vehicle in Idaho.
Illinois Administrative Code Title 38 dictates title loans in this state. Loans are limited to $4,000 or half of a borrower’s monthly income. No interest rate cap exists in Illinois. The term limits for loans are 15 days between loans with one renewal allowed on payment of 20% of the principal.
The state of Mississippi regulates title loans under the Title Pledge Act. Borrowers can only receive a maximum of $2,500 for a loan with a 25% per month interest rate. The loan term remains limited to 30 days but it can renew with a 10% principal payment. The borrower receives 85% of any surplus on sale after repossession.
In Missouri, the aptly named Title Loans Law governs title loans, unsurprisingly. The maximum amount for title loans is $5,000 with no cap on the interest rate. Lenders can use sale after repossession to pursue any deficiency balance but must pay any surplus to the borrower.
The dryly named Nevada Revised Statute 604A.105 governs title loan laws in this state. Lenders can loan an amount up to the fair market value of the vehicle as a loan with no cap on the interest rates. Borrowers can’t be sued for deficiency balances in Nevada.
New Hampshire regulates title loans under the Pawnbrokers and Moneylenders Act. A title loan can’t exceed $10,000 and the interest rate can’t exceed 25% per month, excluding any lien fees. Terms get limited by law to one month, with a maximum of ten renewals, with 10% of the principal paid down for each renewal. That means the loan should theoretically be completely paid off by law after the last renewal period.
The New Mexico Small Loan Act dictates terms for title loans within the bounds of this state. Borrowers can’t receive more than the $2,500 maximum loan amount. No cap exists for the interest in New Mexico and terms are limited to a single installment.
Title loans in this state fall under the Tennessee Title Pledge Act. Interest charges can’t exceed 2% a month but lenders can charge a fee of not more than one-fifth of the original loan principal. Terms can only go beyond 30 days once, then 5% of the principal of the loan must be paid for each renewal after the second. Borrowers can’t be sued for deficiency and any excess belongs to them in the case of repossession and sale.
Texas has a laundry list of codes that title loans fall under. The Texas Financial Code Title 5 Sections 393.001-393.628, Texas Administrative Code Title 7 Sections 83.1001-83.6008, the Texas Finance Code Chapter 302, and the Title 1 Texas Business and Commerce Code all regulate various parts of title loans. For all of those different laws, the only limits seem to include just a 10% interest cap. No maximum for loan amounts or other details about the repossession and sale of vehicles. Loans can’t exceed 180 days according to term limits, however.
The Utah Title Lending Registration Act regulates the title loan industry in this state. Borrowers may only have one title loan at a time, and lenders are limited to loaning up to the fair market value of the vehicle. Lenders can’t sue borrowers for deficiency balances. Any surplus after repossession and sale of the vehicle belongs to the borrower and not the lender.
Virginia marks another state with several long titles that dictate title loan laws. The Code of Virginia Title 6.2 Chapter 22 and the Virginia Administrative Code Title 10 Chapter 210 both cover title loans in this state. Unlike Texas, these cover a lot of regulations relating to title loans. Loans can only cover 50% of the fair market value of the vehicle. The interest rates can’t exceed 22% per month of outstanding balance up to $700, 18% for loans between $701-$1400, and 15% for loans $1401 and up plus lien fees. Lenders can assess a 5% payment late fee payment after 7 days past. Due dates for loans must fall under equal monthly installments, at least 120 days up to 12 months with no rollovers or renewals allowed. Lenders can’t sue borrowers for deficiency amounts. Surplus following repossession and sale of the vehicle belongs to the borrower.
Wisconsin regulates title loans under the Wisconsin Statutes and Annotations, Chapter 138, Section 16. The maximum loan amount can’t exceed 50% of the fair market value of the vehicle, up to a maximum of $25,000. No cap on interest rates and lenders can’t sue borrowers for deficiency. If repossession and sale of the vehicle occurs, any surplus belongs to the borrower.
States That Allow Title Loans With Restrictions
California hasn’t technically outlawed title loans. They merely capped the interest rate on loans at 30% under $2,500. Starting January 1st, 2019, they set the cap at 36% plus the Federal Funds Rate for loans between $2,500 and $9,999. But you can still get a title loan in the state of California.
Florida has title lenders that operate under consumer finance law. They include additional fees such as credit insurance fees but they still offer title loans in that state. Other than the umbrella under which they work, they work much the same way in this state.
Technically, title loans count as open-ended lines of credit in the state of Kansas, like a credit card. Kansas doesn’t regulate or cap interest rates on open-ended lines of credit. Likely because of credit cards and similar financial products.
Typically, all title loans in Louisiana exceed $350 to avoid restrictions. The term limits exceed two months for the same reason. But title loans work much the same way, just with a longer term and a minimum loan amount of $350.
Credit Service Organizations provide title loans in Ohio. They fall under this umbrella to avoid restrictions in this state. Offers of title loans also happen under mortgage loan laws as well. But again, they work in much the same way as other title loans.
Much like with California, South Carolina title loans have a minimum loan amount to get around restrictions on interest rate caps. In the case of this state, the minimum loan amount is $600. Beyond this minimum amount, not many other restrictions apply to title loans in South Carolina.
Other States Not On This List
Any states not listed here may offer title loans but most likely won’t have any title loan providers. Either states outright prohibit title loans, or title loans face the same interest rate guidelines as more traditional lending. For such short terms and with much lower amounts than home or vehicle financing loans, most loan providers can’t operate in these states.
Though it should be noted that you still may find title loans in other states than those listed here. Be sure to check your local area and consult with any companies in your state. They may offer them at lower rates or have other loan products that may serve your needs better.
Similar But Distinctly Different Loan Of Auto Pawn
There is another loan that is similar called an auto pawn, but by contrast, those require possession of the actual vehicle rather than just the title. So states that allow such loans did not make this list, as that differs too much. A title loan allows you to keep your vehicle and continue to drive it, unlike an auto pawn.
Much of the data presented on this page can be found in this report from the CFA.
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