You’re an Alabama resident and you’re in a bit of a financial pickle. You can’t go to a bank for a loan, and you need more than what a payday loan can provide. So, you wonder: does Alabama offer title loans? It does, but there are certain provisions about which you should be aware.
Just What is a Title Loan?
This is a secured loan that uses your car as collateral. Such loans are designed for those who needs cash quickly to manage debt, pay bills, or, most commonly, to deal with an emergency. They tend to range between $100 to around $5,500.
Title Loans in Alabama
Laws vary by state, and in Alabama, title loan lenders are required to be licensed. This is to protect you, the borrower, against possible fraud, or in the unlikely event that things go left. Such laws also shield you if the lender doesn’t follow state laws. For instance, if your loan is from a lender that isn’t appropriately licensed, that loan would be no good.
Further, title loans in the Yellowhammer state are governed by the Alabama Pawnshop Act, which prohibits activities such as false advertising or selling, or charging for, any type of insurance.
How Much Can I Get?
First, you must be at least 19 to get a loan. How much you can borrow is up to the lender but is based at least in part on your earnings and your vehicle’s value.
Contract Requisites
Each legal agreement will contain:
- The make, model, and year of the vehicle you’re offering as collateral, along with other vehicle descriptors
- Your name, address, and birthdate
- Loan date
- Type of identification presented
- Your description, including your gender, ethnicity, and height
- Loan amount
- Repayment date and amount due
- Monthly rate and any charges
The Title Loan Process and Repayment
Title loans in Alabama are subject to either an agreed-upon interest rate or, in lieu of a rate, a monthly charge that cannot exceed 25 percent of the loan. Thus, if your loan totals $3,000, added charges may be no more than $750.
While you’re making payments, you can keep your vehicle and drive it as usual. However, the lender may keep your title until the loan is cleared. It will place a lien against your title for the amount owed, including interest or fees.
There also needn’t be any concerns about another person fraudulently claiming your title by erasing the balance or through any other means.
If the contract in your possession becomes lost or is destroyed or stolen, you must immediately apprise the lender, in writing. Subsequently, the original agreement becomes void if the title hasn’t been redeemed already.
Repossession Protection
In Alabama, if you don’t repay the loan by the date on which it’s due, your lender will hold your title for another 30 days. You may redeem your title during that time by paying the agreed-upon amount, plus interest or charges. You’ll also be assessed an additional charge in the same amount of the original one.
In some states, the lender may repossess your vehicle for failing to make payments and sell it to cover your debt. Any leftover monies then go to you. In Alabama, though, your vehicle title will be forfeited, and all sale proceeds will go to the lender. Thus, if you fail to pay the balance of a $3,500 loan, the vehicle can be repossessed, even if it’s valued at markedly more than that.
So, yes, Alabama does indeed offer title loans that can help you when you’re in need, and laws that protect you from malfeasance. All you must do is make your payments as agreed.
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