Car title loans were designed to streamline the loan process, and be a fast way to get cash. Before signing your loan agreement, however, it’s important to understand the title loan laws and how they work.

Each state has its own unique laws to protect borrowers from financial hardship or misinformation. Reviewing them can help you make a smart decision about your loan, as well as keep yourself informed about the title loan laws and your rights as a borrower. This can contribute to you making an informed decision before choosing the right loan option for your finances.

What Do I Need to Know about Title Loans and Title Loan Laws?

The most basic requirement for a title loan is that you must be at least 18 years of age, and your title must be lien free as well as in your name. While some states have banned title loans altogether, most states just have specific regulations to follow.

Title loans are secured single or multiple installment loan that may allow you to borrow off of the equity in your vehicle. Your title becomes collateral for the loan, and a lien is placed on it throughout the duration of the loan. Your chosen lender becomes your lienholder, and the lien is removed once the loan has been repaid in full.

A lien is simply the legal right to an asset or property. In terms of a title loan, a lien is just a form of security to the lender that the loan will be repaid. Since collateral is used to secure the funding and speed up the approval process, there are many regulations that come with it. Choosing a collateral based loan such as a ChoiceCash Title Loan ensures those from all financial backgrounds can apply for a loan, regardless of credit history.

Repossession Laws

If a consumer is unable to pay back their title loan on time, some choose to renew the loan or refinance it instead of defaulting on payments.  However, if a consumer cannot pay back the loan, the lender can repossess the car as the lienholder. If your car has been repossessed, some states will require lenders to give borrowers the opportunity to pay the remaining loan balance and prevent the vehicle from being sold in an auction. If your vehicle was sold for less than the loan balance, however, some states will require you to pay the difference even after repossession.

While there are ways to avoid repossession , it is a risk that you should know your rights about.

For example, in Michigan, if a loan falls into a default with title loan lender, the borrower has at least 15 days to reclaim their vehicle once it has been repossessed. This means, paying your loan in full. For states like Indiana, a lender may repossess your vehicle after the first defaulted payment.  However, Indiana law requires a repossession agent to notify law enforcement prior to repossession of your vehicle, which can give you time to repay your loan.

Before taking out a title loan, it is important to make sure you do not plan to go in default, and that you are aware of your state laws concerning repossession ahead of time.


Fees and Penalties

One of the possibilities with some title loans are fees associated with borrowing money. While it can be a possibility, it is not an occurrence with every lender. However, it can be wise to have an idea of what type of fee regulations or laws are in place to protect you. For states like Michigan, there is a cap on processing fees so lenders cannot charge you more than $250. States like Texas, however, have no cap on fees that a lender can charge you.

Another factor you’ll need to know the laws for are the prepayment penalties. If you want to pay your loan early, be sure to find out if the lender charges prepayment fees on your loan.

Requirements for Title Loans

Title loan requirements may change from state to state, but the general and initial requirements for a title loan in most states are:

  1. Borrower Must Be at Least 18 Years of Age
  2. Borrower Must Have a Title in Their Name
  3. Borrowers Must Have Enough Equity in Their Car
  4. Borrowers Must Be Able to Provide Proof of Ability to Repay the Loan

Your exact requirements may change based upon the state you reside in, but they are generally fairly simple to understand. Since you are using the title as collateral, your car must have equity and it must be in your name. You’ll need to provide proof of income or alternative income, so a lender can trust the loan won’t immediately default. In most states, you’ll need to be at least 18 years old to take out a loan through a lender.

Choosing Your Own Title Loan

Ultimately, if you are short on cash and you have the ability to keep up with payments, a title loan could be the right solution for you. As long as you’re aware of the car title loan laws in your state and your responsibilities, you should be comfortable with this option!

Getting started through loan options like ChoiceCash Title Loans can be easy to apply for, and they were designed to streamline your approval process to fast cash. Borrowers can choose between a few different ways to get started:

  1. Go online and fill out a short, prequalification form. This can take just minutes to do, and it will help speed along the loan process!1
  2. Call a loan agent directly through the toll-free line at 855-422-7402.