Georgia Title Loan Laws
Title loans are an increasingly popular lending option that let people borrow relatively small amounts and over short periods. These loans are an alternative to traditional bank loans that are generally easier to acquire and can be obtained on short notice. A title loan differs from other short-term loans, such as payday loans, in that the loan is secured. Since repayment is guaranteed, loans can be less expensive overall. As with all types of lending there are laws in place to protect consumers and avoid predatory lending practices. These Georgia title loan laws, such as Georgia code 44 12 131, legalize and set limitations on title loans and other forms of short-term lending.
Are Title Loans Legal in Georgia?
Title loans are legal throughout the state and rather than govern them via distinct Georgia title loan laws, the state governs them via existing pawn laws. In fact, title loans are a lot like pawn transactions: You hand over — at least in a legal sense if not a physical one — a vehicle title in order to secure a small loan over a short period. When you repay the loan within the agreed-upon period, the pawnbroker returns the property. Title loan rules in Georgia govern all aspects of these agreements, including who can lend and how high interest and fees can be.
Legal and Practical Title Loan Requirements
There are both legal and practical requirements regarding title loans. Although a title loan is a lot like a pawn loan, you never have to relinquish your car. After all, that would be counterproductive, and you can still use your vehicle to go to work, run errands and so forth. Instead, a lender places a lien on your vehicle title and can then use that lien to claim reimbursement if you default on the loan. There are restrictions on who is eligible for a title loan, and lenders cannot lend to just anyone. You must:
- Be at least 18 years of age
- Possess valid, government-issued identification
- Provide proof of residence and income
- Hold a title for a vehicle that you own outright
That you possess the title and own the vehicle outright is a crucial component of a title loan. Leased vehicles aren’t eligible because you lack ownership. Vehicles being financed aren’t eligible either because the bank financing the loan already has a lien on the title so another isn’t possible. If you need assistance with or have other questions regarding your title or state-issued ID, contact the Georgia Department of Driver Services.
Georgia Regulations Governing Lenders
Just as not anyone can’t get a title loan, not just anyone can lend them. All lenders must be a Georgia licensed industrial loan lender. That means the lender has filed as a lender and has met the requirements to be certified. It also means that its lending practices are monitored by the state on an ongoing basis. Before completing a Georgia title loan license application or taking other steps, you should ensure that the lender is valid. If you have questions regarding a particular lender or about lenders in general, you should contact the Industrial Loan Division of the Office of Insurance and Safety Fire Commissioner.
Title Loan Contracts
When you agree to a title loan, you’re entering into a contract with the lender. That contract provides the lender certain rights, such as the ability to repossess and sell your vehicle if you default on the loan. These agreements must be in writing. Verbal contracts are not allowed in this domain. In addition, per title loan laws in Georgia, title loan contracts must include specific language as set forth by state law, and they must indicate certain details specific to the loan, such as loan amount, interest, fees, term and so forth. To recap, title loan contracts must:
- Be provided in writing
- Indicate the loan term
- Indicate all interest and fees
Minimum and Maximum Loan Amounts
Neither Georgia title loan laws nor Georgia pawn shop regulations limit the amount a borrower can borrow and a lender can lend. In other words, loans can be as small or as large as the borrower and lender agree to. There are, however, practical limitations, such as the book value of the car. Generally, lenders will not lend more than 60 percent of the book value of a vehicle. This ensures that they can receive total compensation in the event they need to repossess and sell the vehicle.
Minimum and Maximum Loan Terms
Title loan laws in Georgia set both the minimum and maximum term at 30 days. Therefore, you cannot take out a title loan for 24 hours or a week as you can in some states. Per Georgia pawn shop regulations, the minimum term is inflexible and will always be 30 days. However, the maximum term is flexible because if both the lender and borrower agree, loans can be extended 30 days at a time. Lenders who offer the option will usually extend that offer up front. This way, the consumer knows in advance that extending the loan for another 30 days is an option. Without that assurance, a consumer runs the risk of losing the vehicle if the loan is not repaid within the original term.
Limits on Title Loan Interests and Fees
Title loan rules in Georgia limit how much a lender can charge you. During the initial 30 days and up to 90 days, lenders may charge interest up to 25 percent and a fee up to $10 per 30 days. A lender can charge additional fees, but the total obligation cannot be more than 25 percent of the principal amount advanced plus $10. After 90 days, a lender cannot charge more than 12.5 percent interest and $5 per 30-day period. This ensures that the consumer pays no more than 300 percent annually for the first 90 days and no more than 150 percent annually beyond the first 90 days.
Vehicle title loan repossession laws in GA are defined in code sections 44 12 131 and 44 12 138. If a title loan is not repaid within the agreed-upon term, the lender has the right to repossess the vehicle and sell the vehicle in order to be compensated. A lender does not have a right to any more than what was owed to it. Let’s say a lender lends a borrower $2,000 and the consumer agrees to repay that amount plus $500 interest and a $10 processing charge. That borrower pays $600 on Friday for three weeks but then defaults on the loan. The borrower has repaid $1800 but still owes $710. The lender repossesses the car and sells it at auction for $4,500. The lender must then pay the borrower $3,790 minus repossession fees, up to $50, and storage fees, up to $5 per day.
Great effort was put forth to ensure that the information provided here is accurate and helpful, but please note that Georgia title loan laws, like all laws, can change. You should not approach this information as legal guidance or presume that it is current at the time of reading. If you require additional assistance with a Georgia title loan license application or other aspects of a title loan, the Georgia Department of Banking and Finance is a great place to start. If you have questions regarding a scam, predatory lending practices or vehicle repossession laws in Georgia, then contact the Consumer Protection Unit of the Georgia Department of Law.