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You may be surprised that the Federal government isn’t in charge of setting laws and regulations regarding title loans. They only require that lenders pre-disclose to borrowers certain terms, limitations, and provisions such as the APR, duration of the loan, and the total costs of a credit agreement or loan.
The rest is up to the states. Each state has different, comprehensive title loan laws, and they change often. While some states have set guidelines that the lender and borrower must meet, others are only able to provide them with strict restrictions or by using title loan loopholes (gaps or exceptions) in the law. Other states outlaw them altogether.
Understanding the title loan laws in your state is important, but it can be overwhelming. See our chart below for an overview of each state’s most recent requirements and legal status.
- Title Loan Regulations & Disclosures For 2023
- What Are Title Loans?
- Title Loan Laws Across States
- Reporting Fraud/Deception
- Car Title Loan Military Protections
- Pros and Cons of Getting a Title Loan
Title Loan Regulations & Disclosures For 2023
Disclaimer: The following table is provided as a reference only. Title loan laws change often and the information in the table may not be fully up-to-date. Be sure to consult with a financial or legal advisor before taking action, as we are not liable for any decisions made based on the data below.
|State||Legal Status||Loan Amount (Min-Max)||Maximum Monthly Interest Rate|
|Alabama||Legal||$100 – $50,000||25%|
|Arizona||Legal||$100 – $50,000||17%|
|California||Legal||$2,500 – no maximum||36%|
|Delaware||Legal||$100 – $50,000||Unlimited|
|Georgia||Legal||$100 – $50,000||25%|
|Idaho||Legal||$100 – $50,000||N/A|
|Illinois||Legal||$100 – $4,000||N/A|
|Louisiana||Legal||$350 – $50,000||36%|
|Minnesota||Legal||$100 – $350||36%|
|Mississippi||Legal||$100 – $2,500||25%|
|Missouri||Legal||$100 – $5,000||25%|
|Montana||Legal||Up to $5,000||15%|
|Nevada||Legal||Up to fair market value||–|
|New Hampshire||Legal||Up to $10,000||–|
|New Mexico||Legal||$100 – $2500||36%|
|Oregon||Legal||$100 – $50,000||36%|
|Rhode Island||Legal||$100 – $500||25%|
|South Carolina||Legal||$2,500 – $50,000||N/A|
|South Dakota||Legal||$100 – $5,000||25%|
|Tennessee||Legal||$100 – $2,500||25%|
|Texas||Legal||$100 – $50,000||10%|
|Utah||Legal||Up to fair market value||–|
|Virginia||Legal||Up to 50% fair market value||22%|
|Wisconsin||Legal||$100 – $25,000||N/A|
*Green: legal/legal with restrictions or loopholes
What Are Title Loans?
An auto title loan is a loan against a car’s equity. Title loan lenders typically require you to own a car lien-free to get a title loan.
When you borrow money against the car’s title, you give up the title in exchange for the funds. However, the good news is that you keep the car and can drive it normally. You make payments to the title loan lender, and when you repay the loan, you receive the title back.
How Title Loans Are Regulated
Title loan regulations occur at the state level. Each state has different requirements for car title loans, but states typically fall into one of the following categories:
In these states, title loans aren’t allowed under any circumstances
This means that title loans are allowed, however they may come with restrictions including a maximum APR, loan amount, or term length.
- The states listed below fall into this category. This means that the state either bans title loans or has strict requirements, but a lender is able to structure the loan outside of the typical title loan definition or requirements.
- Kansas – Lenders are able to offer title loans structured as “open-ended lines of credit.”
- California and South Carolina – Lenders can get around the states maximum APR by starting loan amounts above a certain amount.
- Louisiana – Lenders can provide loans over $350 with terms of at least 2 months to avoid restrictions set by their state.
Title Loan Laws Across States
Title loan laws vary widely across state lines; however, they can be lumped into two primary categories – states that ban auto title loans altogether and states where they are legal. Let’s take a closer look.
Illegal Title Loan States
The following states Do NOT allow title loans under any circumstances. This means that If you live in one of the states below, you will need to investigate different financing options.
If you’re in need of quick financing, complete an application on our website to see if you qualify for one of our other loan products.
- New Jersey
- New York
- North Carolina
- North Dakota
- West Virginia
Legal Title Loan States
The following states DO allow title loans. It is important to understand that each state has different legal requirements set by the state legislature (provided below). These include maximum and minimum loan amounts, terms, and interest rates.
Check Out Your State Law Below:
- Alabama – Ala. Code §5-19A-1 et seq.
- Arizona – Ariz. Stat. 44-281 et seq.
- *California (loophole state) – Cal. Financial Code §4970 et seq.
- Delaware – Del. Code Tit. 5 §§ 2250 et seq.
- Florida – Fla. Stat. 537 et seq.(537.001-537.018)
- Georgia – Ga. Code §§ 44-12-130et seq.
- Idaho – Idaho Code Ann. § 28-46-501 to -509
- *Kansas (loophole state)
- Kentucky – Ky. Rev. Stat. 286.9-010 et seq.
- *Louisiana (loophole state) – RS 9:3578:1 et seq.
- Minnesota – Minn. Stat. § 47.60 et seq
- Mississippi – Miss. Code §§ 75-67-401 to -449
- Missouri – Mo. Rev. Stat. §367.500-367.533
- Montana – Mont. Code 31-1-701 et seq.
- Nevada – Nev. Rev. Stat. § 604A.105
- New Hampshire – N.H. Rev. Stat.§ 399-A
- New Mexico – N.M. Stat. Ann. §§ 58-15-1 to -38
- Oregon – Or. Rev. Stat. Ann. § 725A.101 et seq.
- Rhode Island – R.I. Gen. Laws §19-14.1-1 et seq.
- *South Carolina (loophole state) – 34-39-110 et seq.
- South Dakota – S.D. Codified Laws Ann. §§ 54-4-70 to 72
- Tennessee – TN Title Pledge Act (§ 45-15-101 to § 45-15-120)
- Texas – Tex Fin. Code tit.5 §§ 393.001-393.628
- Utah – Utah Code §§ 7-24-101 et seq.
- Virginia – Code of Virginia Tit. 6.2 Chap. 22
- Wisconsin – Wis. Stat. § 138.16
Lender Tip- Be Aware of Repossession Risk
If you receive a title loan, keep in mind the risk of repossession. If you are unable to repay your loan, the lender has the right to repossess your vehicle and sell it to satisfy the loan. These laws also vary by state.
In some states, for example, the title lender must wait ten days before repossessing your car after providing 20 days to make up a missed payment. In others, the laws require title lenders to allow borrowers to redeem themselves and pay the loan balance before selling the car. Check out your state below to see the specifics on your state.
Consumers should always know their rights and be aware of any unethical or misleading practices such as aggressive sales tactics and deception from title lenders. If you suspect fraudulent or deceptive practices, contact your state attorney general or report the actions to the Federal Trade Commission.
Car Title Loan Military Protections
If you’re in the military, you have certain military protections, including a maximum title loan interest rate you can be charged on title loans, credit cards, or many other consumer loans.
The maximum APR for Military servicemembers is 36%. In addition, you have certain protections and assistance at your disposal if you have financial issues, including talking to a Personal Finance Manager or seeking additional support.
Pros and Cons of Getting a Title Loan
With any type of financing, there are pros and cons to consider. At Montana Capital, we want you to understand your options so you make the best decision for you.
- Typically receive funds within one business day
- Keep possession of your vehicle during the loan
- Bad credit friendly; credit is only one determining factor
- Not available in all states
- Risk of repossession
- High annual percentage rate
What Is the Difference Between Payday and Title Loans?
The difference between title and payday loans is immense. Payday loans are loans in between pay checks. They are short-term loans, but a much shorter term than title loans. You repay payday loans on your next payday.
If you don’t repay the loan in full, you’ll incur fees and incredible interest rates. Title loans use your car as collateral, have a much longer repayment term, and for a higher loan amount, usually for up to 36 months.
How High Are the Interest Rates on Title Loans?
Title loans have high interest rates, usually around 60% to 175%, so be sure you need the funds before taking out a title loan.
Why Do Some States Not Allow Title Loans?
State and federal governments get involved in title loans because of the high interest rates and potential for predatory lending practices. Working with reputable title lenders like Montana Capital Car Title Loans is important to ensure you aren’t being taken advantage of if title loans are allowed in your state.
Do I Need a Lawyer to Dispute a Title Loan Claim?
If you feel your title lender breached your contract, having attorney representation is best. This will ensure you’re properly represented in court during title loan disputes and won’t be treated unfairly.
Do I Need Proof of Insurance to Qualify for a Title Loan in My State?
Some states require you to qualify for a title loan. However, because most state laws require car insurance to drive, this shouldn’t be a condition that holds you back.
What Happens if I Cannot Pay Back My Title Loan in the Expected Period of Time?
Talk to your loan servicer if you can’t pay your title loan back; they have a mutual interest in working out a solution as opposed to repossession. If you can’t come to a mutual agreement, consider trying to refinance your title loan to get a lower payment. The key is not to default too long or risk losing your car.