State Laws Regarding Car Title Loans

Car title loans also called vehicle equity loans, pink slip loans, and so on, have been issued in the United States ever since the first launch of cars. Getting a car title loan is now much different than a few decades ago.

Each state in America has their distinctive laws and regulations, especially when it comes to registered loan lenders on how much they can charge. These set rules can also control the company on what they can do if the borrower fails to repay the loan. It is recommended that you consult an attorney before having a deal with pawn companies.

How do these Car Title Loans Work?

First of all, how can you get a car title loan from online companies or retail offices? For you to borrow money by pawning your car title, the car should have been invested in your possession or should at least have some equity in it. However, there are some cases where lenders allow t borrow you some money, even if the vehicle is still in an auto purchase loan.

The amount of money that you can borrow will be based on the value or equity of your car. Normally, the loan can range from $100 up to $5,000. Here are a few steps on how they work:

Step #1:

Show the lender your:

  • Car
  • Application
  • Photo ID
  • And of course, the vehicle’s title

There are some lenders that will ask an extra copy of your car keys or makes you purchase a plan of roadside service.

Step #2:

If the contacted lender agrees with your loan, he or she will give you the money as soon as needed and will keep the car’s title.

Step #3:

Usually, in 30 days, it’ll be the time that you repay your loan to the lender. Immediately pay back the amount of money that you borrowed from the lender, plus with a monthly fee.

Title Loans has been Banned in 25 States

A lot of states have completely banned these online title loans, funding in credit services organization or direct lenders is also included. This is because these states see these types of loans as a type of predatory lending or loan sharking.

So before you take an auto equity loan, you should do a bit of research if these types of title loans are even available in your state.

To help you out, here is a short list of states that permits title loans:

  • Florida (30% of APR)
  • Texas (120% of APR)
  • Nevada
  • South Dakota
  • Alabama (300% of APR)

If you want to learn more about these rules, you can click here for state laws.


Most people that pawns their vehicle’s title, usually need the borrowed money to pay for hospital bills or for an important financial need. A lot of people only go for this type of loan if it is completely necessary. This is sometimes the only resource for people that needed quick cash. Car title loans may need to see some regulations, however, they should not be removed.