Things to Know About Title Loans in Alabama

The state’s Pawn Shop Act governs title loans in Alabama, thus many of the pertinent regulations applying to pawning items in the state also apply to car title loans. These regulations establish the licensing requirements for lenders, actions they can take and the maximum legal interest rate.

The rules governing loan renewals as well as rollovers are also specified. They also define the maximum loan amounts, minimum payment amounts and the assessment of fees and penalties.With that in mind, let’s look at some things to know about title loans in Alabama.

What is a Title Loan?

In exchange for pledging the title to your car as collateral, title loan lenders will advance you a short-term loan. In most cases, the loan term runs anywhere from 10 to 30 days. The loan amount is based upon your ability to pay, along with the value of the vehicle being offered as collateral for the loan.  Borrowers must be 19 years of age or older. If your loan isn’t repaid as agreed, the lender has the right to take possession of the car and sell it to recoup the money they loaned, as well as any interest and fees that may have accrued.

Applying for a Title Loan in Alabama

Before filling out a loan application form, you should gather the following documentation:

1. Government-issued proof of your identity in the form of a driver’s license, state ID card, passport, or military ID.

2. Proof of residence in the form of a utility bill, mortgage coupon, rental agreement, telephone bill, or the like.

3. Proof of income, such as a pay stub, tax return, etc.

4. Title documentation for the vehicle in your name. If you own the vehicle in conjunction with another person whose name is also on the title, that person will need to complete an application and provide all the documentation above as well.

5. Photographs of the vehicle from all four angles, as well as the interior. You’ll also need to provide a close-up of the odometer reading and the vehicle identification number (VIN), corresponding to the data you provide on the application form.

All this information will be needed to approve your loan.

Loan Agreement Requirements

Once approved for the loan, you’ll be required to sign a loan agreement, which will spell out the terms under which you agree to accept the loan.

Data included in that agreement should include:

1. The color, make, model and year of the vehicle.

2. Your personal information, including your name, address and the date of your birth.

3. The date the loan agreement goes into effect (which should be the same as the date you accept the funds).

4. The form of identification you presented.

5. A physical description of your person, including your height, gender and ethnicity.

6. The exact loan amount.

7. The date by which the loan is required to be paid in full—including interest and fees.

8. The interest rate and/or fees – title loan lenders are limited to charging no more than 25% of the loan amount monthly.

Repayment Terms/Lender’s Recourse

Title loans in Alabama are required to be repaid in full on or before the agreed upon repayment date. Rather than interest, a lender may choose to charge a fee, which cannot exceed 25% of the loan amount each month.

You’ll retain possession of the car, and can use it as you see fit during the repayment period. If the vehicle is sold, or involved in an accident and deemed a total loss, the title lender must be paid in full. You can keep any amount remaining after the debt is settled.

No other person can pay off the loan and take title to the car. The contract is between you and the lender alone.

You have 30 days from the date of a missed payment to bring your account current and reclaim title to your vehicle. You will be assessed an additional interest charge, as a penalty for missing the deadline.

If you do not pay at all within 30 days of the missed payment, the lender has the right to seize the vehicle and sell it. Under Alabama law, the lender will be granted complete ownership of the vehicle and can legally keep all proceeds of the sale.

In Summary

As you can see, paying strict attention to the regulations governing title loans in Alabama is critical to ensuring that your short-term loan does not become a long-term nightmare.  The most important thing to remember is you need to be certain you can repay the loan, plus the associated fees and interest within the period allowed. Do that, and you’ll get the cash you need and solve your problem handily.

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