Many Americans decide to opt for auto title loans in times of need, because the way these loans are granted is really fast and helps when in a hurry. However, these loans can be really hard on the borrower if there aren’t constant changes to auto title loan laws are made.
Beginning with the correct explanation of auto title loan laws, we will go ahead and talk about what changes to auto title loan laws have been made over the years. Auto title loans are short-term loans which are granted against the title of your car. They generally do not last longer than a month.
The title lenders provide you with a loan depending on the value of your car and awith-interest price needs to repaid in an agreed upon time period. The interest rates are usually high, as it is with most short-term loans and one can have great debts on their head due to that reason. If the loan isn’t paid in time, the lender can take the ownership of the car and sell it off to get the loan back, mostly at a price that is advantageous to them.
What are the changes in the laws considering auto title loans?
These are the renewed auto title loan laws:
- The agreement of the original term shall not last more than 30 days.
- Only ten original periods, each equal the original term, shall be renewed by the lender, given that, the borrower must at least pay 10 percent of the loan’s original principal balance, along with any owed finance charge.
- In case, the borrower isn’t able to pay the loan’s principal balance at any renewal, it is the duty of the lender to either
- Declare the borrower unable to pay the loan.
- Allow a renewal in the loan, only if, the current principal amount of the loan is reduced by 10 percent from the original principal amount, by the lender, so that interest can be calculated. This reduced principal shall still be owed by the borrower, but this amount shall not ensue any interest afterwards.
The knowledge of these laws is very important and one must not violate these laws if they do not want legal action of some sort against themselves. These provisions usually do not have exceptions, if they did, it could harm the borrower gravely.