Idaho Title Loan Laws
Title loans are short-term, secured loans that are asset-based, not credit-based. Title loans are based on the fair market value of the vehicle that serves as collateral. Most title loans are small-dollar loans designed for short-term financial issues like catching up on bills, paying rent, or making car repairs. In Idaho, title loans have a maximum 30-day term but may be renewed to give consumers additional time to pay.
Idaho title loan rules regulate many areas of the industry, including capping loan terms and regulating what title lenders may and may not do. There is currently no cap on the fees of title loans in the state. Idaho is one of 17 states that allow car title loans with triple-digit APRs, along with states such as Alabama, Arizona, Georgia, Nevada, and Delaware. Delaware title loan requirements are most similar to Idaho as both states place no cap on the costs associated with car title loans. While the two states have similar title loan rules, Delaware caps the term of title loans to 180 days (with renewals) but offers consumers additional protection with additional requirements for a title loan in Delaware. This includes the right to cure a loan, which means lenders must offer defaulted borrowers a plan to pay 10% of the principal per month to keep their vehicle. Under Idaho law, borrowers receive only a 10-day notice to cure the loan.
The following are the most important title loan rules in Idaho that regulate the industry and protect consumers and lenders from harmful practices.
Idaho Title Loan Act
One of the most important Idaho title loan laws passed was the Idaho Title Loan Act that went into effect in 2006. This legislation requires lenders become licensed under the Idaho Credit Code to make title loans. Under new title loan laws in Idaho, if lenders make title loans without a license, the loan transaction and the lender forfeits the right to collect on the loan. The lender is also required to release its security interest and return to the borrower any principal, interest, and fees it has collected, the title to the vehicle, and the vehicle itself if the lender has repossessed.
The Act also spells out specific new title loan rules in Idaho. Title loan agreements are required to include the year, make, and model of the vehicle that serves as collateral; the vehicle identification number (VIN), the license plate number; the name, address, and birthdate of the borrower; the date the agreement is executed; the maturity date of the loan; the name and address of the title loan office; and several specific statements designed to protect the consumer.
Title loan agreements in Idaho must state that the loan is not designed to assist with long-term financial needs and should only be used for short-term cash needs. It must also warn consumers that the loan may have a high interest rate and encourage consumers to consider other low-cost loans available.
Idaho Title Loan Laws on Term Limits and Renewals
There are also caps placed on the term length, renewals, and other terms of title loans in Idaho. Under the Idaho Title Loan Act, title loans cannot exceed 30 days in length. Title loans can be renewed, however. Loan renewals can happen automatically unless, before the end of the loan term, the borrower has paid off the principal and finance charges or surrendered the vehicle.
There are also specific terms a borrower must meet to renew a title loan under Idaho title loan laws. Starting with the third renewal, the borrower must make a payment of at least 10% of the principal of the original loan amount plus any finance charges that are due. Finance charges that are due at every successive renewal must be calculated based on the outstanding principal amount. Any principal payments exceeding 10% of the principal must be credited to the outstanding principal balance on the day the payments are received. At the maturity of a renewal that requires a principal reduction payment, if the borrower has failed to make adequate previous principal payments and the borrower can't pay at least 10% of the original principal balance plus outstanding finance charges, the title loan provider can (but is not required to) defer required principal payments until a later date. In this case, no new finance charges on this principal amount can accrue.
Idaho title loan laws also give lenders specific responsibilities during renewals. Title lenders are required to give written notice within 14 days to a borrower when a loan is automatically renewed. This notice can be made through regular mail to the address listed on the loan agreement or via personal delivery.
Borrowers also retain the right to cancel a title loan agreement after signing. A borrower can cancel their obligation to pay under the agreement by returning the cash or original check to the location where the loan was originated by the close of the next business day.
What Happens When Your Car Gets Repossessed in Idaho
Idaho vehicle repossession laws protect borrowers and require lenders follow specific regulations for a legal repossession. Idaho vehicle repossession laws that are most applicable in terms of title loans are the rules regarding surpluses and deficiencies. When a vehicle is repossessed, the lender typically sells the car to a used car dealer or through an auto auction. If the amount recovered from the sale is less than the borrower owes (outstanding loan balance plus reasonable repossession fees), the borrower will still owe a deficiency balance. If the vehicle sells for more than the borrower owes, the lender must turn over the surplus money to the borrower. The borrower has the right to challenge the amount of the deficiency if the sale of the vehicle was unreasonable or the lender made errors in calculating the deficiency.
Borrowers do not need to receive advance notice of a repossession, but Idaho title loan repossession laws require the lender provide a written Notice to Cure Default. This notice will include the amount of the outstanding balance (including new fees and charges associated with the repossession), the deadline to redeem the vehicle, and how you can redeem the loan to get the car back. The Notice to Cure Default must be mailed to the borrower's last address in the title lender's file to notify the buyer of 10 days from the date of the notice to cure the default.
If the borrower does not redeem the car, the lender must provide a written notice of sale that explains if the car will be sold at a private sale or public auction (with the date of the intended sale and the auction information), an explanation of the borrower's liability for any deficiency balance, and how the proceeds of the sale will be applied to the debt.
Under the Uniform Commercial Code -- Secured Transactions section of the Idaho Code, lenders cannot add additional finance charges to the debt once the lender obtains possession of the vehicle.
Under Idaho title loan repossession laws, the lender must also provide post-sale notices once the vehicle is sold. This notice explains how the proceeds of the vehicle sale were applied to the debt. Idaho vehicle repossession laws allow lenders to apply proceeds first to reasonable expenses of repossessing, storing, and disposing of a vehicle plus reasonable attorney fees before applying proceeds to the loan balance.
Illegal Practices Under Title Loan Laws in Idaho
The Idaho Title Loan Act specifically prohibits certain practices by title lenders:
- Making title loan agreements with anyone under the age of 18 or anyone who appears intoxicated.
- Making an agreement that gives the lender recourse against the borrower other than the lender's right to take possession of the vehicle and title upon default and to sell or dispose of the vehicle according to law. The exception is when the borrower prevents repossession, damages the vehicle, or commits fraud.
- Making an agreement in which the amount loaned (combined with the outstanding balance of any other title loan agreements the borrower has with the same lender and the same property) exceeds the retail value of the vehicle.
- Accepting a waiver of any protection or right the consumer has under the Idaho Title Loan Act.
- Making a title loan agreement unless the borrower presents a clear title when the loan is made. If a title lender files a lien against a vehicle without clear title to the vehicle, the lien is void.
- Adding accrued interest or fees to the original principal of the loan agreement when the loan is renewed.
- Requiring the borrower to give an additional guaranty to receive a loan.