At one point or the other, we have been in a situation where we needed money quickly and end up taking title loans – loans taken using the vehicles registered under the borrower’s name – due to challenges in accessing credit from other facilities to cater for our pressing needs. And while title loans give us financial freedom for a while, they also come with their own burdens – payment and defaulting.
Different states have different laws regarding title loans. Before borrowing any title loan from any state, it is essential that you first get to learn the laws for each state and the terms outlined. This way, when taking a title loan, you know the requirements and the penalties that are involved. Below we have sampled a few laws from different states within the country.
While there is no maximum loan limit for a title loan taken in the state of Alabama, the loan terms are usually limited to one month with interest rates capped at 25 percent. However, titles in this state are taken as a pawn and are not lien on the vehicle.
Just like Alabama, there are no maximum loan limits in Arizona either. The difference, however, is that in Arizona, the loan terms are defined by the lender. A loan of up to $500 will attract an interest rate of 17 percent monthly, those from $501 – $2,500 are capped at 15 percent and loans from $2,501 to $5,000 are at 13 percent. Loans given above $5,000 have an interest rate capping of 10 percent. Lenders have the right to add a five percent fee on loans that are paid late, i.e., ten days after the due date.
Title loans in Georgia have a 30-day limit even though the borrow can opt for an extension. There are no caps on the loan amount taken. Such loans attract a 25 percent interest rate for the first three months after which it decreases to 12.5 percent. The state, however, has lien fees that are applicable for title loans.
A title loan in Illinois cannot be above $4,000 or be more than 50 percent of the monthly income of the borrower. However, there is no limit on the interest that can be applied. In Illinois, you will need to give a copy of your title to get a loan. When it comes to renewal, the law only accepts one renewal which is approved when one has paid at least 20 percent of the original amount.
Nevada is a bit flexible when it comes to title loans as you can easily get a loan for the fair market value of your vehicle. 30-days is the set loan term. However, one can renew their loan up to six times with the lender having the freedom to determine the amount of loan they want to charge. If the borrower chooses not to issue the title of the vehicle, the lender will need to be added as a lienholder and have rights to the vehicle as well.
Title loans are not allowed in every state but in some. If your state allows for title loans, it is important to learn the laws of your state so as to be aware of the legal requirements as well as determine whether a title loan is indeed appropriate for your financial state.