Car-Title Regulation As of December 2012

Car-Title Chart Terms

A car-title loan is a short-term cash loan, secured by the borrower’s title to a vehicle. State laws Max Loan is the maximum size of the car-title loan authorized by state law. determine whether car-title loans are authorized, the terms of the loans, and consumer protections for the loan or of the vehicle if a borrower cannot repay in full when the loan is due. Cost Limits either displays the maximum loan cost per month or that the state sets no cap on rates. In some states, lenders can charge both interest and fees. CFA categorizes the legal status of car-title lending, depending on whether this loan product is specifically authorized, whether title lending operates through legal loopholes, or are effectively NSF/Fees include late fees and other fees lenders are permitted to charge. prohibited. Term Limits are the maximum duration of a car title loan, plus any loan renewals or roll-overs Permit: 17 states permit car-title loans at triple-digit APRs: Alabama, Arizona, Delaware, Georgia, Idaho, as well as any requirements to pay part of the loan principal when a loan is renewed. Illinois, Mississippi, Missouri, Nevada, New Hampshire, New Mexico, South Dakota, Tennessee, Texas, Utah, Virginia, and Wisconsin. Of these states, Delaware, Idaho, Illinois, Missouri, Nevada, New Mexico, Cost $500 shows CFA’s calculation of the total finance charge and the South Dakota, Utah, and Wisconsin set no cap on the cost of a car-title loan. (APR) for a one month $500 car title loan at the maximum rate authorized in state law. For Texas, the average loan cost reported to state regulators is displayed. Loophole: Car-title lenders operate in four additional states by structuring loans to fall outside of state Sale/Leaseback? Column notes those state laws that prohibit title lenders from structuring credit law definitions. For example, title loans are available in California and South Carolina for larger loans as if the borrower “sold” a vehicle to the lender, then paid to “lease” the vehicle. amounts to avoid the small loan rate cap. Kansas title loans are structured as open-end credit, since Sale/Leaseback has been used as a tactic to evade state rate caps or fee limits. Kansas has no rate cap for open-end credit from licensed lenders. In Louisiana, car-title lenders make loans for more than $350 and terms exceeding two months to avoid state law restrictions. Repo Terms summarize briefly any provisions in a state’s car title loan law that apply to

repossession of the borrower’s vehicle on default. This column does not include each state’s Restrict: The remaining states authorize car-title loans at lower rates and likely do not have car-title Uniform Commercial Code provisions that apply to secured loans. lenders operating in the state, prohibit by statute or do not permit car-title lending under existing credit laws. Right to Cure spells out state law protections for a borrower whose vehicle has been repossessed before the vehicle is sold to repay the loan. This includes time limits to catch up on payments or any extended payment plan options lenders are required to offer. Consumer Federation of America overview of state car-title regulation

Surplus/Deficiency means any law requirements that the lender return extra funds from selling Permit: permit or cap at high a repossessed vehicle after paying off the title loan, interest, and repossession fees; or whether

interest rates the lender is permitted or prohibited from suing borrowers for any amount still owed after the vehicle has been sold.

Loophole: Car title lenders are Prohibited Practices is the list of actions car title lenders are forbidden from doing. exploiting loopholes to evade consumer protections Title Required notes which state laws require that the lender hold the borrower’s vehicle title to secure the loan. Arizona’s law is silent on this point, but state regulatory interpretations is that

Restrict: prohibited, subject to a “title loan” can be made to a borrower who does not hold title to the vehicle in question. a restrictive cap, or

omitted from consumer credit law

States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Cost $500 Sale/LeaseBack? Repo Right to Surplus/Deficiency Prohibited Title Loan Limits Terms Cure Practices Required AL Permit Ala. Pawnshop 25%/mon. Month $125/300% Prohibited 5-19A-5© 30 days Lender keeps Sell or Act (Ala. Code APR surplus charge for § 5-19A-1 et insurance seq. AZ Permit Motor Vehicle 17%/mon. Late fee up $85/204%APR May extend Lender gets No Time Sales $500 or less; to 5% of payments, deficiency balance, Disclosure Act 15% per unpaid defer borrower gets (Ariz. Stat. 44- mon. $501- balance of payment(s), surplus. 281 et seq.) $2,500; installment renew 13%/mon. if not paid unpaid $2,501- in full on balance or $5,000; tenth day restate the 10%/mon. after due unpaid more than date balance. $5,000

DE Permit Del. Code Tit. No Cap Up to180 No cap UCC, Offer plan, Borrower gets FDCPA Yes 5 §§ 2250 et days, surrender pay 10% surplus. No violation, seq. including prin. Per deficiency balance. threat of roll-overs month criminal action, advertise teaser rate

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States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Limits Cost $500 Sale/LeaseBack Repo Right to Cure Surplus/Deficienc Prohibited Title Loan ? Terms y Practices Required GA Permit 25%/mon. Lien; no 30 days, $125/300% Prohibited Repo Yes Lender keeps Not advertise Yes Law (Ga. 1st 3, 12.5% more than may extend APR w/o surplus as loan Code §§ 44- after; plus lien $5 a day judicial 12-130 et fee in storage process, seq. fees $5/day storage post repo. $50 to $250 repo fee ID Permit Idaho Code No Cap 30 day loan No cap Notice Yes, 10 day Borrower gets Loan more Yes Ann. § 28- term. On notice surplus, no than worth of 46-501 to - 3rd renewal, deficiency balance vehicle. Loan 509 have to pay (Ch. 9 Title 28 without clear 10% of Idaho Code title. principle each renewal.

IL Permit IL Admin. $4000 No Cap No ck Equal No cap Prohibited Notice No balloon Yes Code Tit. or up to cash fee installments, payments 38, 50% of 15 days §§110.300- monthly between 410 income loans. 1 renewal if pay 20% prin.

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States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Limits Cost $500 Sale/LeaseBack? Repo Right to Cure Surplus/Deficiency Prohibited Title Loan Terms Practices Required MS Permit Title Pledge $2,500 25%/mon. Sales fee 30 days, $125/300% 30 days after Borrower gets 85% Can't pay off Yes Act (Miss. may renew APR loan maturity of surplus, no loan with Code §§ 75- if pay 10%. date; or 3 deficiency another title 67-401 to - days after loan, loan 449) repossession. exceeds Repo w/o $2,500.00; judicial sell insurance process. If salvage, can sell immediately.

MO Permit Title Loans $5,000 No Cap $25 NSF, Not less No cap Repo 20 days after Can pursue No waiver of Yes Law (Mo. orig. fees than 30 notice of deficiency balance, rights, make Rev. Stat. days, on 3rd right to cure must pay surplus loan without §367.500- renewal pay clear title. 367.533) down 10% Cannot use of loan "pawn" or "pawnbroker" terms NV Permit Nev. Rev. Up to No Cap NSF; no 30 days, 6 No cap Interest 15 day No deficiency No criminal Title or Stat. § fair additional renewals, 90 days notice, offer balance threats, no add 604A.105; market fees may go up after repayment hold lender as see p.10 value of to 210 days plan harmless, not lienholder vehicle if conditions by terminal, to title met not looking at customer's ability to repay

Consumer Federation of America consumerfed.org/financial-services/

States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Cost $500 Sale/LeaseBack? Repo Right to Surplus/Deficiency Prohibited Title Loan Limits Terms Cure Practices Required NH Permit Pawnbroker/Lender $10,000 25% 1 NSF/ck. one month $125/300% No POA, no Act (N.H. Rev. interest per original APR plus confession of Stat.§ 399-A) month plus term, 10 lien fee judgment, not lien fee renewals if waive rights, pay down only one loans 10% of secured by loan title, not allowing right to cancel within one day; making loan to someone w/outstanding loan in 60 day period NM Permit "New Mexico Small $2,500 No Cap No Cap Yes Loan Act" N.M. Stat. Ann. §§ 58-15- 1 to -30

SD Permit S.D. Codified Laws No Cap 30 days, 4 No cap No deficiency Yes Ann. §§ 54-4-70 to renewals balance, borrower 72 (Subject to then pay gets surplus provisions of § 57A- 10% of 9) loan plus fees and interest

Consumer Federation of America consumerfed.org/financial-services/

States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Limits Cost $500 Sale/LeaseBack? Repo Terms Right to Surplus/Deficiency Prohibited Title Loan Cure Practices Required TN Permit TN Title $2,500 1/5 loan + 30 days, may $110/264% 20 days No deficiency No waiver of Clear Pledge Act (§ 2%/months automatically APR balance, borrower rights, no title 45-15-101 to renew; on gets surplus loan on required § 45-15-120) 3rd renewal encumbered pay 5% of title, no original insurance principal amt. plus int. and fees

TX Permit Tex Fin. Code No cap 10% interest Contracts for No cap. Yes tit. 5 §§ cap; no fee credit Ave. based 393.001- limit services on 393.628; Tex. cannot regulator Admin. Code exceed 180 data: tit. 7 §§ days 114.11 or 83.1001- 277% APR 83.6008; /Ch. 302, Texas Finance Code; Title 1 Texas Business and Commerce Code UT Permit Title Lend. No Cap May renew No cap No deficiency No loan w/o Yes Reg. Act balance, borrower ability to (Utah Code gets surplus repay, no §§ 7-24-101 rollover w/o et seq.) request, only 1 loan per vehicle

Consumer Federation of America consumerfed.org/financial-services/

States that permit car-title lending as of December 2012

State Status Citation Max Cost Limits NSF/Fees Term Limits Cost $500 Sale/LeaseBack? Repo Terms Right to Surplus/Deficiency Prohibited Title Loan Cure Practices Required VA Permit Code of Up to 22% per 5% of Equal 264% APR, 10-day Right to No deficiency No loan if Must Virginia Tit. 50% of month of payment late monthly $110 if notice of cure balance, surplus to motor have title 6.2 Chap. 22 fair outsanding fee after 7 installments, prepaid in repossession prior to borrower vehicle has to mkt. balance up to days past due at least 120 one month if lender sale of existing vehicle, value of $700, days up to 12 charges and repo. lien/one loan lien must vehicle 18%/$701- months; no collects at a time; no be filed $1400; rollovers, reasonable prepayment with 15%/$1401+ renewals costs of penalties; no DMV lien fee repo and loans to sale of active-duty vehicle military WI Permit Wis. Stat. § Up to No cap 2.75%/month Up to 6 No cap 20 days No deficiency May not 138.16 50% months notice prior balance, surplus to require key value of to borrower as security vehicle; repossesion $25,000 required max

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