Alabama Regulations

Short-term title loans can be a great way to acquire some quick cash if you don’t have the best credit. The only requirements are a valid driver’s license and a vehicle that’s titled in your name. There are several other considerations to make, including the interest rate and terms of the loan, as well as any state regulations that may apply.

Depending on your state, or county, or even the town, the major laws governing title loans can differ. These rules also decide what the lender can do in case of a defaulted payment. Some states restrict interest rates that may be charged, while others don’t. It is important to know all the federal and state laws that apply to you. It is also important to understand what laws apply to lenders, so that you may avoid being taken advantage of.

There are no federal laws regulating title loans, each state is in charge of regulating its own industry. However, these loans are being discussed in detail at the federal level these days. The Consumer Bureau for Financial Protection is involved and making new plans – not to make title loans illegal, but to discuss new laws to ensure that lenders are lending only to borrowers who have the capacity to repay the loan. There are also proposals to mandate lenders report periodically to a federal agency. These rules would be put in place in order to ensure that fair lending practices can be enforced, protecting borrowers from predatory lending.

Title loans are legal in Alabama, and there is no regulation on the amount that a consumer may borrow. Loan terms should be more than ten days, with a maximum term of one month. The rate of interest chargeable by the lenders is up to 25 percent per month. These regulations are all established by Alabama state law.

Before taking a title loan in Alabama, customers should fully comprehend the state’s title loan laws, and in particular, the repossession laws, which are different from other states. A failure on the part of the borrower to repay the full amount within 30 days entitles the lender to full ownership of the loaned vehicle. At this point the lender is legally allowed to repossess the vehicle. The lender is also allowed to sell the vehicle in order to recover the outstanding balance of the loan. In Alabama, the lender would be able to keep the entire sale price of the vehicle and is not required by the law to give any refund to the borrower.

Title loans are meant for short-term, urgent financial needs and are advisable only in situations where the customer is certain they have other means by which they may cover the debt. Title loans can be useful for small amounts of money, especially if the need of the borrower is only temporary. If you find yourself needing title loans on a regular basis, you should rethink your financial habits. The lender is supposed to maintain detailed records of all the transactions and is not allowed to do any kind of false advertising.