Car Title Loan Laws by State
A title mortgage is generally a useful resource for people who cannot or will not use their regular credit history. However, title mortgages have some dangers and are a sensitive topic. There are no comprehensive federal rules or laws regarding car title loans, but there are a number of legal regulations that vary from state to state.
Some states have specific requirements for title mortgages, while in other states, title loans are illegal or strictly prohibited. How to qualify for car title loans completely online, as of 2021, each state’s mortgage lending rules are as follows
State mortgage title laws in 2021
The rules for online title mortgage lending vary from state to state, but the 50 states can be divided into three groups. The first group is made up of states that have banned title lending entirely. Title lending prohibits the use of a car as collateral for a loan. The second group, on the other hand, is made up of states that have much looser regulations or no authority over title lending. Currently, 46 of the 50 states fall into one of these two groups, but there is a third group: the “loophole states.”
The loophole states are an unlikely combination, including California, Louisiana, South Carolina and Kansas. These laws are designed to ban title lending altogether, but leave loopholes in which lenders can operate.
Although title loans may be prohibited in these states, it is possible to obtain a title loan in these states. In some states, title loan companies charge low interest rates, but in others, lending rates of 300% are common. You can also find lenders in different states or by registering with an organization offering online title loans, but this is not a guarantee.
States with less stringent regulation of title mortgages
There are 17 states that allow online title loans, but we have to divide these states into two groups. The first group are states that have looser restrictions, such as limits on the price and term of a title mortgage.
- New Hampshire
The recurring factor is what happens if the mortgagee is unable to pay off the loan and the lender resells the car to pay off the title mortgage. In Alabama and Georgia, the lender can not only pay off the mortgage but also pocket the excess value of the car. In most states where title loans are allowed, the lender can simply recoup the shortfall from the sale proceeds and the excess must be returned to the borrower.