Consumer Credit Regulation: 12.2.4.35 North Dakota
North Dakota does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
North Dakota does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Ohio does not have an auto title lending statute, and its pawn statute explicitly excludes auto title lending because it requires the vehicle, not just the title to be pawned.161 However, Ohio’s installment loan laws, all of which, other than its short-term loan law, allow lenders to take security interests in vehicles, authorize interest and fees that can exceed a 200% APR.
Oklahoma does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
In Oregon, auto title lending is authorized by statute.162 However, the law contains many restrictions.
Pennsylvania does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Puerto Rico does not have an auto title lending statute, but its Pawnbrokers’ Act explicitly defines pawn transaction to include an auto title pawn.173 For applicable state regulation, see Appendix D, infra.
Rhode Island does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Auto title lending is authorized by statute in South Carolina.174 The law does not set the applicable usury cap. Instead, that cap is established by the state small loan law. That law sets no cap for loans over $600.
In South Dakota, auto title lending is authorized by statute.179 The law did not contain any interest rate cap until 2016, when the voters approved an initiative that sets a 36% cap, including all ancillary charges, on non-bank loans, including auto title loans.
Auto title lending is authorized in Tennessee.
In Texas, auto title lending is authorized by statute.192 Interest rates on auto title loans are not capped and lenders are permitted to charge any fees for their services as agreed to between the parties.193 Lenders are merely required to disclose to the borrower the interest, fees, and APR that will be charged in the transaction, as well as the amount of accumulated fees that the borrower will incur if the agreement is rolled over.
Auto title lending is authorized in Utah by the Title Lending Registration Act.196 The law does not contain any interest rate or fee caps, and rollovers are permitted.197 The law prohibits a lender from making a loan without considering the borrower’s ability to repay, and further requires the lender to examine the borrower’s income, expenses, and employment.
Vermont does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Auto title lending is authorized in Virginia.198 The law applies whether or not the lender is physically located within the state, and applies to loans made over the internet to Virginia residents and any individual who is in Virginia.199 The monthly interest rate cannot exceed 36% annually, but a monthly charge of 8% of the loan amount or $15, whichever is less, is also permitted.200 Fees
Washington does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
West Virginia does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Auto title lending is authorized in Wisconsin.203 While the law does not impose any restrictions on the interest rate that lenders may charge to borrowers prior to the maturity date of the loan,204 lenders are limited to charging 2.75% per month or (33% a year) on loans that are not paid in full by the maturity date.205 The law does not allow a lender to repossess a vehicle without sending the borrower notice twenty days prior to taking possession
Wyoming does not have an auto title lending statute and its pawn statute does not reference auto title loans. For applicable state regulation, see Appendix D, infra.
Auto title lending is also typically subject to a state’s other laws of more general applicability, such as unconscionability, fraud, misrepresentation, and unfair and/or deceptive practices.207 Some state lending laws prohibit unconscionability, or a UDAP statute applicable to lending may contain such a provision.208
If state law where the consumer resides prohibits high-interest auto title loans, auto title lenders may use various schemes to instead fall under some other jurisdiction’s law regulating auto title lending. One way to do this is to set up shop just over a state’s border in a neighboring state with a high usury limit.
In at least Texas, explicit legislation allows auto title lenders to evade the state’s regulation of auto title lenders by claiming to be loan brokers who receive a fee for arranging a third-party auto title loan for the consumer.220 In other states, it is a matter of court interpretation whether the lender is truly a broker arranging a third-party loan or whether it is really arranging a loan for itself.
Auto title lenders may seek to avoid auto title loan or small loan legislation by claiming that the transaction is not a loan at all, but instead that the consumer has sold the vehicle to the auto title company and that the company is leasing the car back to the consumer.227 Evidence that this is a fictitious evasion is apparent where the auto title lender in fact advertises that you pawn your title but keep your car or somewhat more ambiguously “quick cash 4 your car/keep to drive.”
Some states have one usury cap for small loans and another much higher cap or no cap at all for open-end credit. In addition, Truth in Lending Act disclosures for open-end credit are much less informative than disclosures for closed-end credit.236
An auto title lender may attempt to get around a usury cap by combining the loan with an overpriced service that the lender claims is not interest and should not be included in the calculation of the interest rate.
The Consumer Financial Protection Bureau (CFPB) enacted a final rule covering auto title, payday, and similar loans. The rule required lenders to engage in an ability-to-repay analysis and also limited the use of preauthorized payments.248 While the rule was enacted, the CFPB later rescinded most of the rule before it went into effect.