Title Loan Laws
Title loan laws are changing on a regular basis. Some states have banned auto title loans completely while others have regulated different aspects of the loan type. Depending on the state you live in regulations on title loans such as interest rates, rollover frequencies and fees may occur. There is not a federal law on pink slip loans so legislation is left mostly to the states. Be sure to research your state’s regulations and choose a lender that complies with these.
Currently, sixteen states allow car title loans at interest rates into the triple digits:
- New Mexico
- South Dakota
States have either banned title loans through legislation or capped title loan rates into the double digits making the business unprofitable and therefore almost extinct in these states:
- Florida – 30%
- Iowa – 36%
- Kentucky – 36%
- Montana – Voters ended the practice in 2010
- New Hampshire – 36%
- North Dakota
- West Virginia
- North Carolina
- New Jersey
- Rhode Island
- New York
Legislative loopholes allow four other states to lend title loans as well: California, Texas, Kansas and South Carolina.
California allows auto title loans but the loan amount must be $2500 and there are no APR caps after that amount.
Kansas is allowed to lend if the loan is sold as an open-ended credit.
Texas lends through a Credit Services Organization model loophole.
South Carolina has no APR limits for loans $600 or more.