Consumer loans including the auto title loans and personal loans are under the regulation of financial regulatory agencies such as Federal Deposit Insurance Corporation (FDIC), and Federal Reserve Board (FRB). Auto title loans, also known as car title loans is a type of loan where your car is used as collateral. You will be able to get back your car after you have pay off all your interest charges and other fees. If you fail to clear off the outstanding debt, they will repossess your car.
Most auto title loans have a loan term of 30 days and the interest rate ranges in between 250% – 400%. Some online lenders charge a higher interest rate of up to 650%. The majority of the borrowers can borrow a few hundred dollars but there is the possibility of borrowing up to a few thousands dollars in this type of loan.
The regulation for the auto title loans vary across the different states in the United States. Every state has a different set of rules on the maximum amount that the lender can charge you. Your state may also have different rules on the rules on what types of actions they can take when you fail to make the repayment and have accumulated a large amount of debt.
There are a number of states that set a cap on the maximum amount of APR rate the online lender can charge. If you are facing a difficult financial situation and cannot repay your loan, you should discuss with an attorney. Alternatively, you can also call the regulatory agency of your state to discover what you can do to get back your vehicle.
Some states do not authorize certain auto title loan products so you must first check whether your state authorize the loan product that you want to sign up. Half of the states in the USA have positive views on the loans. There are 4 states that offer auto title loan through loopholes including California, South Carolina, Kansas and Louisiana. In California, loans that are above $2,500 are not restricted with small loan limits. In Kansas, the auto title loans are used as open ended credit lines. Louisiana does not impose any restriction on loans that are higher than $350 and have 2 months loan term. South Carolina does not put any limitation on loans that are higher than $600.
In conclusion, although it can be expensive to apply for auto title loan online, many people still resolved to this type of loan because they need some money to cover their temporary expenses. These regulations are beneficial towards consumers in that they prevent the lenders from mistreating the consumers for example charging an exorbitant interest charges or taking severe action against borrower that fail to pay off the auto title loan.