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Consumer Credit Regulation: 12.2.3.2 Applicability of State Pawn Legislation

To try to take advantage of the high usury cap under pawn statutes, lenders argue that the loan is a pawn because the contractual language that they themselves draft gives the “pawnbroker” a security interest in the property. Only the title is pawned, however, not the vehicle itself—there is a security interest in the vehicle, but the vehicle itself is not given to the lender to hold during the loan term.40

Consumer Credit Regulation: 12.2.3.3 Applicability of Small Loan Acts

If the pawn statute does not apply, then the question will be whether the state’s remaining general credit legislation has a usury cap.48 While in most states, the usury cap for small loans will prevent high-rate auto title lending, this will depend on the specifics of the state’s small loan legislation.

Consumer Credit Regulation: 12.2.4.3 Arizona

Arizona has an auto title lending statute that provides maximum monthly rates for auto title lending of different dollar amounts—17% if under $500, 15% if otherwise under $2,500, and 13% if over $2,500 but under $5,000, and 10% if over $5,000.63

Consumer Credit Regulation: 12.2.4.8 Delaware

In Delaware, auto title lending is authorized by statute.65 Interest rates are capped at 5% over the Federal Reserve discount rate66 The law prohibits the rollover of auto title loans beyond 180 days from the date of the original loan disbursement.67 Lenders are required to offer the borrower a workout agreement prior to repossession of the vehicle.68 Borrowers are permitted t

Consumer Credit Regulation: 12.2.4.10 Florida

In Florida, auto title lending is authorized by the Florida Title Loan Act.,73 Interest rates are capped at 30% per year on the first $2,000, 24% per year on the principal amount exceeding $2,000, and 18% per year on the remainder.74 The statute provides that the principal to which these rates apply is the amount financed as defined by the federal Truth in Lending Act.75 The effect of this provision is to prevent a lender from evading the interest rate c

Consumer Credit Regulation: 12.2.4.11 Georgia

In Georgia, auto title lending is authorized by the state’s pawnbroker statute.81 Pawnbrokers are not allowed to enter into vehicle leaseback arrangements with a pledgor.82 The law allows pawnbrokers to charge a maximum interest rate of 25% of the principal amount advanced for each thirty-day period during the first ninety days of any pawn transaction, and 12.5% for each thirty-day period if the transaction is continued or extended beyond ninety days.

Consumer Credit Regulation: 12.2.4.14 Illinois

In Illinois, “title-secured lending” was formerly authorized by statute96 without any interest rate cap.97 However, effective March 23, 2021, the legislature imposed an all-inclusive 36% APR cap, calculated pursuant to the Military Lending Act, on title loans in the state.98 This revision to the state’s laws effectively bans title

Consumer Credit Regulation: 12.2.4.16 Iowa

In Iowa, auto title lending is authorized,105 but lenders are limited to charging an interest rate of 21% per year.106 Consumers are entitled to a refund of any amounts paid in excess of the statutorily allowed amount,107 and may recover the excess amount either from the person who made the excess charge or that person’s assignee.108 In addition, if a creditor contracts for or receives a finance charg

Consumer Credit Regulation: 12.2.4.17 Kansas

Kansas does not have an auto title lending statute and its pawn statute does not explicitly include auto title loans. For applicable state regulation, see Appendix D, infra. Specifically, Kansas auto title loans are often regulated under the state’s open-end credit statutes that have no usury cap.112

Consumer Credit Regulation: 12.2.4.18 Kentucky

Auto title lending is authorized by statute in Kentucky.113 Title loan agreements are limited to thirty days in duration114 and may be renewed for additional thirty days periods of time; however, the agreements cannot be renewed, rolled over, or consolidated more than three times in succession.115 Lenders are prohibited from lending more than $4,000.116 Interest rates

Consumer Credit Regulation: 12.2.4.24 Minnesota

In Minnesota, auto title lending is characterized by statute as a pawn transaction.122 Pawnbrokers can charge 3% interest per month not including a reasonable storage and services charge that cannot exceed $20 if the pawnbroker only has a title and not the vehicle in its possession.123 Pawnbrokers are required to obtain a license as a used motor vehicle dealer.124 Pawnbrokers are also required to verify that the pawned vehicles do not have any lien