A "title loan" offers the consumer cash from the lender in exchange for the title of a paid-for vehicle to secure the loan. (The titled property can be a passenger vehicle, motorcycle, boat, or airplane.) Typically, these loans are due back in full 30 days later. There's no credit check and only minimal income verification. The fees range from $80 to $100 for a loan amount of $500. The annual percentage rate (APR) on these loans can be as high as 250%. By federal law, title loan lenders must disclose the interest rates in APR terms, but it is common for title lenders to hide the APR in favor of a monthly rate, which appears less usurious. Many states regulate title loans.
It is common for title lenders to accept interest-only payments for an extended period of time, which causes the consumer to in a very short period of time pay more in interest than the amount borrowed. The lender has the right to repossess the titled property if the consumer defaults on the loan.
Because of the very high interest rates and stiff fees and high risk for losing a vehicle they have paid for, consumers should avoid title loans.
Importance of State Laws
Regarding your question, "Do they have to repo the car first and then hold me responsible for any remaining balance if any?" The answer to this question depends on the laws in your state of residence.
Here is the worst-case scenario: For the sake of argument, let us say that the vehicle has a fair market value of $1,000 and that you got a title loan of $400. Let us also assume that you repaid the creditor $0. The creditor has the right to repossess the vehicle, sell it, and if there is any balance left over after paying the interest, balance, and auction fees, you will receive that surplus.
Now let us change the facts and say that for the sake of argument that the vehicle has a fair market value of $1,000 and you got a title loan of $3,000. Let us assume again that you repaid the creditor $0. The creditor repossesses the vehicle and sells it for $1,000 and tacks on $500 in fees and interest. You would be liable for the deficiency balance of $2,500.
Regarding your question, "Do they have to get the judgment before they can repo the vehicle?" the answer is "maybe" and is dependent on your state of residence. In some states the creditor being on the title gives them the right to repossess the vehicle. The vehicle is, after all, in the creditor’s name. In other states lenders will not take possession of a vehicle but instead file a lawsuit to collect the balance due plus court costs and finance charges. You did not mention your state of residence, so it is impossible for me to say what your rights are in your state.
I hope this information helps you Find. Learn. Save.
Best,
Bill
Garland, TX | May 03, 2013
May 03, 2013
- District attorneys, attorneys general, and special prosecutors may charge a person with a crime. Lenders, such as credit card issuers, banks, credit unions, title and payday lenders, do not have the ability to charge people with crimes. A lender who thinks a customer committed a crime is allowed to share that information with a prosecutor. However, just because a lender says something like, "We'll ask the DA to charge you with a crime," does not mean the DA will do so. This leads me to my second point.
- Fraud is a crime of intent. A prosecutor needs to prove beyond reasonable doubt to a jury that the defendant "...intentionally or knowingly (made) a materially false or misleading written statement to obtain property or credit..." Texas Chapter 7 § 32.32.
- Let us assume for the sake of argument a local DA could prove you intended to commit fraud. Under § 32.32, the threshold for a felony conviction is $1,500. I would argue a $550 title loan would be considered a Class A Misdemeanor, and not a felony under § 32.32.
Getting back to my second point, it seems to me your making six payments is strong evidence you intended to repay the title loan. A prosecutor would need compelling evidence to the contrary that overcomes your payment history. A prosecutor would need an admission from you to the effect of, "I planned all along to rip-off that title lender," to show you intended to commit a crime.
My advice? First, read § 32.33 to understand Texas' law regarding hindering a secured creditor. If the title lender seeks to repossess the vehicle and you conceal it, you may be guilty of felony. Second, consult with a Texas lawyer who has consumer law experience to learn more about your rights and liabilities.
Alton, IL | April 23, 2013
April 23, 2013
I think perhaps you were really asking, "What can I do if a lender violates 38 Ill Adm Code 110.390(a)?" Consult with an Illinois lawyer who has consumer law experience to learn what, if any, recourse you have against the lender. If you cannot afford a lawyer, visit the Illinois Legal Aid Online Web site to find a lawyer in your area who provides legal services to people with low or no income.
Granbury, TX | March 29, 2013
March 29, 2013
Consult with a Texas lawyer who has experience with consumer law to learn how to answer Loan Depot's unreasonable claim against you.
February 07, 2013
February 07, 2013
- Read Missouri Collection Laws to get a basic understanding of Missouri's consumer protection laws.
- Read Kansas Collection Laws to get a basic understanding of Kansas' consumer protection laws.
Missouri's laws are similar, though there is no restriction on collecting any deficiency balance. See Missouri Section 400.9-101 to read the statute.
Implied in your question is which state's laws apply. Dig out your loan contract and see if it contains a choice of laws clause. If it does not, consult with a lawyer in your state of residence to learn which state's laws apply. If you are a Missouri resident, the answer to your question is easy. If you are a Kansas resident, then which laws apply is a bit more complicated.
August 08, 2012
August 09, 2012
In all states, arrest warrants are created by judges and magistrates, and not creditors. The collection agent violated the Fair Debt Collection Practices Act when he or she threatened your friend with arrest.
Lake City, SC | May 22, 2012
May 22, 2012
Grand Terrace, CA | April 04, 2012
April 05, 2012
Indian Springs, AL | March 04, 2012
March 05, 2012
January 26, 2012
January 29, 2012
You can try speaking with your state's Attorney General's office, consumer protection division, but I am not sure that they can do anything to help you.
Bartlett, TN | January 14, 2012
January 15, 2012
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