There are times when you may have a shortage of money in your life. Sometimes you need more money to support your lifestyle, or simply pay your college tuition. When people need a large amount of money, they usually take out a loan. Loans are financial devices where you borrow the required sum of money from someone and then return it in a given amount of time. Some loans are secured, some are unsecured. There is a particular type of loan called a title loan, where the borrower may use a vehicle title as collateral.
This type of loan is legal in Mississippi but there are a few rules and regulations you need to follow if you want to apply for a title loan. It is extremely easy to apply for a title loan, but it is essential to follow the rules. The main rule is that the borrower must be at least 18 years old or above. Some loan applications can be rather complicated, but the working principle is rather straightforward. The basic process is that you use your car as collateral in order to borrow a percentage of the value of the vehicle. The amount of money you can borrow depends on the value of your vehicle. After your loan application is approved, the title loan company keeps your title until you pay your loan. Once you’ve paid in full, you get your title back. If you fail to pay off the loan, the company has full authority to repossess your vehicle and sell it.
The Mississippi Title Pledge Act tells you all about the requirements and laws regulating every title loan. According to the Mississippi Title Pledge Act you must have records of all the information about the vehicle being used as a collateral, including its year of manufacture and model. The VIN (vehicle identification number) and license plate number are required as well. You must also have the transaction date, your personal information, including full name, date of birth, social security number, physical description, ID number and issuer. You should also include the loan amount, maturity date, interest rate and APR (annual percentage rate). Any fees, including management and administration, that may be charged on top of the interest rate, must be disclosed as well.
The Mississippi state law caps the maximum interest rate at 25%, or an APR of 300%. Lenders use high interest rates to offset the generally poor reliability of the borrowers. It is illegal to extend the terms of a loan contract. This is not the case in every state, but is the law in Mississippi. Some states allow extension of the terms of the loan, but regulate the number and type allowed. Before applying for a title loan, make sure you understand all the risks. It may be tempting to offer your title, but the results can be devastating if you forfeit on the loan. You may find yourself losing your car, your money, and your good credit.