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