Mississippi Title Loan Laws
There are a few federal regulations in place governing title loans, chief among them being that all title loan borrowers must be 18 years of age or older. Other than that, the majority of the regulation occurs at the state level. The Mississippi Title Pledge Act governs title loans in Mississippi, along with the more recent Mississippi Credit Availability Act.
How a Title Loan Works
While Mississippi title loan laws have some specific requirements for title loan terms and protocols, the loans themselves are fairly simple to understand. When you obtain a title loan, you’re using your car as the collateral on the loan, which means that your car is what determines approval for the loan and also the maximum amount that you’re able to borrow. You don’t need to go through a credit check, making title loans a common option for borrowers with bad credit. Title loans tend to have very high approval rates, since the value of the car involved is all that matters for that.
The title loan company keeps your car title during the term of your title loan. When you repay the loan, the company returns your title to you. Should you default on the loan, the company then has the legal right to repossess your car and sell it.
Title Loan Contracts in Mississippi
The Mississippi Title Pledge Act lays out the requirements for title loan contracts in the state. They’re known as title pledge transaction forms, and they must include the following information:
- Details regarding the vehicle being used as collateral on the loan, including its year, make and model
- Identification information for the vehicle being used as collateral on the loan, preferably the vehicle identification number (VIN) and the license plate number
- The transaction date
- Personal information of the borrower, including full name, date of birth, Social Security number and a physical description
- The borrower’s ID number and the ID issuer
- The loan amount
- The loan maturity date, which is the payment due date
- The loan finance charge, which is the amount of interest added to the loan
- The total amount due on the maturity date
- The annual percentage yield (APR) of the loan
Title Loan Interest Rates in Mississippi
Many states don’t put any sort of cap on the amount of interest that title loan companies are able to charge. Mississippi does, although it’s a very high cap of 25 percent per month, which is equivalent to an APR of 300 percent. If you borrowed a title loan for 2,000 dollars at this 25-percent monthly interest rate, you would need to pay 2,500 dollars in 30 days to pay your title loan off. Title loan companies are able to charge these high interest rates because they’re lending to high-risk borrowers who typically don’t have any other loan options.
Maximum Title Loan Amounts in Mississippi
Title loan rules in Mississippi put the limit on title loan amounts at 2,500 dollars. The maximum amount you can borrow also depends on the current market value of your car, as the title loan company will use that to figure out how much it is willing to lend you. To make sure that your car doesn’t have anything that could significantly detract from its value, title loan companies perform quick vehicle inspections before issuing title loans.
Mississippi Title Loan Terms
Mississippi title loan laws set the length of title loan terms at 30 days. This is the most common term length for title loans across the United States. If you’re unable to pay back your title loan in full on the payment due date, you do have the option of extending your loan for another 30-day term, which is also known as rolling over the loan. In many states, you only need to pay the interest on the title loan to roll it over, and the loan principal carries over to a new repayment period.
Mississippi title loan laws don’t allow you to extend your loan by only paying the interest, and instead the loan principal must also go down by at least 10 percent to on each loan extension. There are two ways that the loan principal can go down 10 percent:
- You can pay at least 10 percent in addition to paying the interest
- The title loan company can take 10 percent from the loan principal
The former is far more likely than the latter, as title loan companies don’t want to lose money by reducing your loan principal for you, especially since they also have the option of repossessing your vehicle.
The high monthly interest rates on title loans combined with the option to extend them makes it far too easy for unfortunate consumers to get trapped in a cycle of debt. If you have bad credit and need a loan for 2,000 dollars, it’s unlikely that you’re going to have 2,500 dollars in 30 days to pay off your title loan in full. It’s more probable that you’d have 700 dollars, which you could use to pay the interest charge and 10 percent of the loan principal to keep your loan going for another 30 days. But if you do this for 10 months, you’ll end up paying a total of 7,000 dollars to pay off a 2,000-dollar loan.
Title loan laws in Mississippi that require you to pay at least 10 percent of the loan principal on an extension do provide some consumer protection. It ensures that borrowers won’t be paying their title loans indefinitely without making a dent in the principal, which can happen in other states. But it still leaves consumers vulnerable to paying a huge amount in interest.
Mississippi Title Loan Repossession Laws
If you fail to make your title loan payment, then Mississippi title loan repossession laws give the title loan company the legal authority to take your car and sell it to recoup the amount of the loan.
The title loan company is able to repossess your car immediately after you default on your title loan, although whoever performs the repossession does need to follow Mississippi towing regulations. No court hearing is required before the title loan company can repossess your car, as they don’t need a court order to do so. Mississippi towing regulations prohibit repo agents from tricking you into bring your vehicle into a shop and then repossessing it when you leave, but they can repossess it if you’ve brought the vehicle into a shop on your own accord.
Repo agents may not breach the peace to repossess your car, which means they cannot use any sort of violence or come into your home uninvited. Keep in mind that filing bankruptcy does not prevent repossession of your car.
Mississippi title loan laws provide you with a right to cure, which means you can catch up on your payments to prevent your car from being repossessed or sold. The right to cure time frame is 30 days after the due date of the title loan payment that you missed or three days after the repossession of your car. After repossession, the title loan company must mail you a notice providing information on the amount you need to pay to prevent your car from being sold, and when the car will be sold. The amount you need to pay to get your car back can include your loan principal, any outstanding interest and repossession fees that the title loan company incurred.
For personal items that you had in your car when it was repossessed, the title loan company will remove those and store them. You can set up an appointment with the title loan company to get those personal belongings back. There may be a storage fee.
If your car is sold, the title loan company puts the money it makes towards what you owe. Fortunately for borrowers in this state, title loan rules in Mississippi prohibit title loan companies from going after them for any deficiency. That means even if the sale of the car doesn’t cover the entire loan amount, the title loan company can’t bill the borrower for the remainder. This may not seem like much, but many states don’t provide this protection. For borrowers in those states, it can seem like adding insult to injury when a title loan company repossesses their cars, sells them and then still sends them another bill.
What about if the car sells for more than the amount that you owe? In that case, the title loan company must provide you with 85 percent of the surplus amount.
The Mississippi Credit Availability Act
In 2016, the Mississippi Senate approved the SB2409 Bill, also known as the Mississippi Credit Availability Act, by a vote of 38 in favor, 11 against. The bill relates to installment loans, including title loans and payday loans.
Much of the bill provided similar stipulations as the Mississippi Title Pledge Act. Part of the reason the Mississippi Credit Availability Act came into being was because the U.S. Consumer Financial Protection Bureau was enacting several reforms across the nation to curb the short-term lending industry. Passing the bill helped ensure that title loans and payday loans would still be available in Mississippi even after those reforms came into play.
The bill certainly attracted its fair share of controversy, despite the wide margin by which is passed. Many critics rightfully pointed out that the high interest rates on title loans and payday loans would result in consumers getting trapped in debt cycles. The interest rates for title loans are actually much lower than the interest rates for payday loans, since payday loans are unsecured, but both still carry sky-high interest rates.
While proponents of title loans and payday loans point out that they allow consumers who have bad credit and no other options to get fast cash, they also bury those consumers under a mountain of debt. These type of loans could work with lower interest rates if consumers only borrowed them to pay off immediate needs and then paid them back on the due dates. However, most borrowers don’t do that, because they’re not in a position where they’re able to. With both title loans and payday loans, many borrowers end up taking out multiple loans per year. Title loan laws in Mississippi at least prevent title loan borrowers from paying off their title loan with another title loan, but this is about the only protection it offers in that regard. It’s still very possible for consumers to end up taking out title loans over and over again.
How Mississippi Title Loan Laws Compare to Other States
Title loans aren’t very borrower-friendly, so borrowers are typically getting a bad deal no matter which state they live in. There are very few states that have put any sort of reasonable limit on title loan interest rates, so in most states, title loan companies are able to jack up rates as high as they want. With its 25-percent monthly interest rate limit, Mississippi ranks on the high end when it comes to title loan interest rates, although it could be worse.
Just about the only place where the state is ahead of the curve when it comes to consumer protections is its requirement that the loan principal must go down by at least 10 percent each time borrowers extend their loans, starting from the very first extension. While borrowers still pay quite a bit in interest by extending their loans, this at least prevents them from paying month after month only to find that they haven’t put a dent in their loan principal, a situation which is far too common in states that don’t have this requirement in place.
Mississippi title loan repossession laws provide you with very little protection, so you’re on your own if you default. While title loans can work as an absolute last resort, you’re better off looking for alternate options.