Laws on auto title loans in van nuys & Throughout the US
Car title loans have become a popular trend in a period of tough economic times. An increasingly large number of citizens have found out that they just cannot make it through the month without a little extra cash in their pockets. Others run into difficulties when they need to make a major purchase or an unexpected expense comes up. Whatever the reason, many people have turned to car title loans in van nuys
How Car Title Loans Work
So how does it work?In exchange for the car title, a car title loan company will issue anyone same day cash with few questions asked. Financial consultants representing car title loans do not do credit checks, since the emergency loan is backed by the equity in the borrower’s car. The borrower gets to keep the car while making the payments, so it works out well. The risk is that if the borrower defaults on the monthly payments, the car title loan company can take possession of the car.
Auto Title Loans – Federal Regulations
The federal government does not get involved in the regulation of car title loans. Auto title loans are governed by the individual state legislatures, which set up the legal guidelines. To protect the consumer from predatory lending in the case of loan companies that set the interest rates too high, many states began to take more of an interest in auto title loans in 2004. Since that time, several states have set restrictions and rate caps on lending to citizens who are serving in the armed forces.
Restrictions on interest became an issue when unscrupulous lenders charged triple digit interest rates. Some states impose rate caps, such as Illinois, which set a maximum loan amount of $4,000, and California, which enforces rate and monthly payment caps. In California, every loan company is required by the California Corporations Code and Financial Code to obtain a state license before they can operate in the state.
But whatever state you live in, it’s very important to do careful research on loan lenders before deciding which title loan provider to go with.