What changes have we seen with California title loans?
California's residents have long been able to take out a car title loan. You can go back decades and see that people have used their pink slip to get quick cash. Just over the past few years we've seen an increase in companies that offer online title loans to residents who live in California. This has really changed the game as you no longer have to physically walk into a lender to get cash for your vehicle. Most companies will still require some type of verification. This can include employment verification and a vehicle inspection. With that, it's become much easier for California residents to get a title loan online opposed to how it was years ago. It can often be easier than if you wanted a payday loan or cash advance. Remember with a pink slip loan, you're putting up a vehicle as collateral. A payday advance is entirely unsecured. As well all know, this type of financing comes with high interest rates and the risk of losing your vehicle if you fall behind on payments. The flip side of that argument is that these secured loans aren't made for everyone. Typically, people who don't qualify for other types of loans such as a bank loan or installment loan will be best suited for a title loan. Most prime personal loan companies won't accept someone with bad credit or past borrowing issues. Due to the increase in online lenders and other factors, there's been an increase in title loans over the past few years. Not surprisingly, the State of California has put new rules in place as a way to regulate the industry and keep out bad actors.
Who governs car title loan rules in California?
There are literally dozens of regulations on the books in California that pertain to title loans. That doesn't include city and federal restrictions. For example, Los Angeles and San Diego have citywide enforcement rules that ban certain lending practices. Sacramento has restrictions in place that seek to regulate the title loan industry as a whole. The Federal Government has many restrictions from all types of governing bodies as well. The CFPB is probably the most well known of these. Just recent the CFPB based new rules that seek to outlaw specific types of loans. While these rules mainly target payday loans, they will also affect car title loans. Please research any rules that may pertain to you on both the local and federal level. As this site is about California title loans, we try to only focus on California specific restrictions. You can view more information about title loans in this state at our homepage. We also break down the steps to take when looking for an online car title loan in California. While some states completely outlaw car title loans, California seems to take more of a mid line approach. They don't deny consumers to make a choice when it comes to getting a loan. But there are some basic restrictions to consider when one needs a title loan in California.
What rules are in place in California?
Like most states that allow car title loan lenders, The Golden State doesn't do much in terms of controlling the interest rates and finance charges that companies assess. Many of the largest companies charge rates to borrowers that can approach 100%. Some secured lenders will have an annual percentage rate that's much higher than this. Those companies are typically out of state and working with a large bank or national lender. If you take out an auto title loan with a company like that, it's important to pay off the full loan amount as quick as possible
You'll notice that most short term financing companies don't offer online title loans of less than $2,500. There's a logical reason for why companies don't provide equity loans under that amount. State law says that loans under that amount can't charge interest rates of more than 33% a year. Therefore, most car title loan companies in California have a minimum amount of how much they can provide for a title or equity loan. These online title loans over $2500 don't have any restrictions when it comes to finance charges. Consumer advocacy groups will say the rates are too high. The car title loan companies will say the rates are high because of the consumers they're dealing with. They say this type of financing comes with high default rates and many applicants have access to no other types of traditional funding. While there's always the option of a payday loan, most borrowers can only access a few hundred dollars with this option. Vehicle equity loans provide a much large loan amount than typical cash advances. Besides the interest restrictions, there are certain fees and charges that a California title lender can charge. As always, we think it's best to look up these restrictions on your own. You can see them at the State of California finance site. There are protections afforded to consumers who miss payments on their vehicle. While this will lead to a repossession, you have rights as a California resident. For example, a title loan lender must tell you that the vehicle was repossessed. You will also have a specific amount of time to pay off the car title loan and hopefully retain possession of the vehicle. Once again, please check out the State of California site that details all this specific information.