Title loans are secured loans that require using an asset as collateral. The asset could be any object that the borrower chooses. The asset could vary from a car title to a piece of insured land, any jewelry or any other asset of importance. Depending on the asset used, title loans can be of various types. Car title loans require a car title to use it as collateral, while land title loans refer to using a piece of insured land as collateral. Even pawning using insured goods is a title loan.
How does Title Loans work?
Title loans are short-term loans that are processed in the presence of a government official. The following is how the process of Title loans work:
- The first step is checking the asset for proper insurance by a government official.
- The lender or the organization involved estimates a price for the asset; They may lend up to 25% of the price of the asset. In the case of pawning, they may lend up to 100% of the value.
- The lender will set a time period and a rate of interest.
- If the money is not returned within the time period, then the lender or the organization can liquidate the asset.
The legal status of Title loans in Florida
According to the Florida Title Loan Act, stated in chapter 537, Title loans are legal in the state of Florida. Using your car, land, and jewelry as collateral is legal according to Florida state laws. These Title loans are lawful only if the asset is collateral under insurance by any registered insurance company.
In case of the absence of insurance, they can also use other valuable articles. It is better to pawn articles for raising some money than using other articles as collateral assets. This is because there are fake and duplicate organizations and money lenders who lend money while keeping most valuable assets as collateral.
Basic rules and regulations regarding Title loans in Florida
Since Title Loans are legal in Florida, there is a set of laws and regulations that prevent organizations from harassing the borrower. Following is the set of laws specifically for Title Loans in Florida:
Registering in the State Office
The Florida Title Loan Act requires the lender to register in the state Office of Financial Regulation.
In order to receive a loan, the borrower and the lender must sign a written agreement before a witness that should state four important facts, viz, the name of the lender and borrower, the amount, the time period and the rate per month.
In case of any fallacy by either the lender or the borrower, they can contact the Florida Office of Financial Regulations at www.flofr.com.
The interest value
The Florida state laws allow the lender to charge interest up to 30% per year for a sum equal or less than $2000, an interest of 24% for additional money between $2000 and $3000 and an interest rate of 18% for any money above $3000. Notice that all these rates will be charged yearly.
The inability to pay off
Another very important law as stated by the Florida Title Loan Act, states that in case of inability to pay off the amount along with the interest, the money lender holds right to possession of the article used as collateral and can sell it. The lender will keep the amount lent along with the interest and the lender may keep some extra expenses while the rest of the money has to be lawfully returned to the borrower.
It is a fact, that the process of money lending and borrowing is risky for the borrower, and thus the person should keep all laws in mind before proceeding with the agreement.