New Hampshire Title Loan Laws
When it comes to title loans, the bulk of the legislation occurs at the state level. The federal government has put a few laws in place, but for the most part it gives each individual state the latitude to set up its own title loan regulations. The result of this is that the rules regarding title loans are often significantly different from state to state, and some states provide far more protection for consumers than others. New Hampshire title loan laws aren’t too restrictive on title loan companies, but it does have a few regulations in place that are helpful for borrowers. Overall, it comes in towards the middle of the pack. If you need to obtain a title loan in New Hampshire or you just want to find out more about them, here is everything you need to know.
How Title Loans Work in New Hampshire
When you get a title loan, you’re taking out a secured loan, which means a loan that has collateral attached to it. In this case, the collateral is your car, and the title loan company has the right to repossess it if you default on the loan. Because of this, you can only get a title loan if you have a car with a lien-free title in your name, which means it must be completely paid off.
Since title loans are contingent on your vehicle, it’s the current market value of your car that determines whether or not the title loan company approves you and the maximum loan amount that it approves you for. This means that there is no credit check involved in the title loan process, which makes these a popular choice among people with bad credit who can’t obtain loans through financial institutions, such as banks or credit unions.
How do you obtain a title loan? The process is fairly simple:
- Visit the office of the title loan company with your car title, your car and your government-issued ID.
- Complete the required title loan paperwork.
- Let the title loan company check out your car.
- Give the title loan company your car title.
- Receive your title loan.
The entire application process from start to finish often takes less than 30 minutes. Title loan companies have made the process as convenient as possible, since their target market is desperate borrowers who need money right away.
One of the federal regulations regarding title loans is a requirement that all title loan borrowers be at least 18 years of age, which is why the title loan company will need to see your ID before issuing you the loan. As far as the car title goes, the title loan company keeps that during the term of your loan. You get it back once you’ve repaid your loan. The title loan company doesn’t keep your car, so you’re free to keep driving that, but it may require a set of spare keys from you. Title loan laws in New Hampshire allow this practice, whereas some other states prohibit it.
State law requires the title loan company to rescind your title loan within one day of receiving it. All you need to do is go to the title loan company with the original check or another form of payment for the same amount.
You may notice on a title loan company’s site an option to fill out an online title loan application form. A standard form will require that you enter your contact information, including your full name, your phone number and your email address, and details regarding the vehicle you’ll be using as collateral, including its year, make, model and approximate mileage. While the title loan company’s site may claim that this is to pre approve you for a title loan, it’s actually just so they can get your information and have one of their title loan representatives call you up to get you to come in. This makes the online application process a waste of time. It’s not going to save you any time when you go in to apply for your title loan, and that process is fast enough as it is. You’ll just have the title loan company calling you, which will be annoying if you decide you don’t want a title loan and unnecessary if you decide that you do.
Maximum Title Loan Amounts in New Hampshire
Two chapters of New Hampshire, NH RSA 397-A and RSA 383-C cover title loan companies and the loans they issue. Under New Hampshire title loan laws, the maximum amount that a title loan company can lend to you is 10,000 dollars. This is one of the higher title loan amount limits in the nation, as many of the states that have these limits set it at either 2,500 dollars or 5,000 dollars. However, there are states with higher limits, such as 25,000 dollars, and many with no limit at all.
Of course, whether you can actually borrow 10,000 dollars from a title loan company will depend on the value of the car you’re using as collateral. The title loan company will appraise your car by plugging its information into a vehicle value guide, such as Kelley Blue Book. Then, they will perform a brief inspection to evaluate its condition and determine a precise value. Keep in mind that a title loan company isn’t going to lend you the current market value of your car. Each title loan company wants to be sure that if you default on your loan, it can make more than enough money through repossessing and selling your car to cover its losses. This means that most title loan companies will lend you up to 30 or 40 percent of your car’s current market value.
The maximum amount for title loans set by New Hampshire doesn’t have much of an impact for borrowers or title loan companies. Most borrowers need an amount in the hundreds or the low thousands, not over 10,000 dollars. Even if a borrower needs more than 10,000 dollars, they would also need a car high enough in value. It’s rare for a person to own a car worth that much and also need to take out a title loan.
Maximum Title Loan Interest Rates in New Hampshire
One of the biggest problems with title loan laws in New Hampshire is the extremely high maximum interest rates. The state sets the limit on title loan interest rates at 25 percent per month, which comes out to an annual percentage yield (APR) of 300 percent. That’s not just high, it’s well beyond what would be considered a high interest rate through any financial institution. If you got a title loan for 1,000 dollars, you would end up paying 250 dollars per month interest.
New Hampshire definitely isn’t alone when it comes to high title loan interest rates, as that’s normal across the nation. Some states have limits a few percentage points lower per month, but not many states limit title loan companies to anything resembling reasonable interest rates. There are some states that put no cap in title loan interest rates, but even there, the standard interest rate charged is 25 percent per month, so the 25-percent limit in New Hampshire doesn’t really do anything to help borrowers.
In 2009, New Hampshire lawmakers actually restored some semblance of reason to the short-term lending industry, as it put a 36-percent APR cap on short-term loans, including title loans and payday loans. This led to lenders in both of those industries leaving the state because they couldn’t make their usual profits. However, New Hampshire revised statutes in 2012 reversed this regulation to eliminate the cap on title loan interest rates. The New Hampshire Legislature even had to overrule the governor’s veto to accomplish this, showing that the state legislature clearly didn’t care about protecting consumers.
Title Loan Terms in New Hampshire
The title loan laws in New Hampshire limit the term length of title loans to one month. This is a fairly standard time frame for title loan terms across the United States, and the only states where this isn’t the normal term are those that require longer minimum terms, which are few and far between.
The problem with such short title loan terms is that it gives borrowers little opportunity to actually make enough money to pay back their title loans on time. Let’s say that you got that title loan mentioned earlier for 1,000 dollars with a monthly interest rate of 25 percent. If you’re dealing with financial hardship so bad that it requires you to take out a loan with that kind of interest at the beginning of the month, how likely is it that you’ll have an extra 1,250 dollars lying around at the end of the month?
Title loan companies know this, and they prey on the desperate, putting borrowers into no-win situations. If you can’t pay your title loan off on the due date, you can instead choose to roll it over, which means you’re renewing or extending the loan for another term of the same length. In most states, you can do this by paying off only the interest, and then you incur another interest charge for the new term. By setting up loans this way, title loan companies make it easy for borrowers to become trapped in a cycle of debt where they only pay off their interest every month and never get any closer to paying off their loan principals.
Fortunately, this is one area where New Hampshire title loan laws provide at least some form of protection for borrowers. The state requires that to extend a loan, you also pay off at least 10 percent of your loan principal. You must do this each time you want to extend the loan to a new term, which means that the longest you could have a title loan in New Hampshire is 10 months. While you would still be paying a huge amount in interest by having a title loan that long, at least you will be paying it off in the process.
Defaulting on a Title Loan in New Hampshire
The most common way that you can default on your title loan is by failing to make any sort of payment. However, this isn’t the only way you can default, as there may also be other terms you need to fulfill listed in your title loan contract. One standard term in title loan contracts is a requirement to maintain insurance on the car that is being used as collateral on the loan. If you didn’t fulfill this requirement or any other requirement in your title loan contract, that would also constitute a default on the loan. It’s less likely that the title loan company will repossess your car for this, though, since they may not even realize it at the time.
New Hampshire Title Loan Repossession Laws
One area where title loan rules in New Hampshire don’t provide much protection is in terms of repossession. When you default on a title loan in New Hampshire, the title loan company is immediately allowed to repossess your car. Many other states at least require the title loan company to provide you with written notice before repossessing your car or even give you a grace period to catch up on your payment, but that’s not the case in New Hampshire. Your title loan company may give you a grace period, but they don’t need to.
A law that applies in New Hampshire and all other states regarding title loan repossessions is that the repo man must not breach the peace to repossess your car. What this means is open to interpretation, so if a repo man does something that could be construed as breaching the peace, it will be up to the courts to decide. A repo man certainly can’t use physical force to take your car from you, such as forcing you out of the car. They also aren’t supposed to trespass on your enclosed property or make any threats of violence. That being said, it’s typically okay for them to come on to your property and take your car if the car is clearly visible, such as a situation where it’s parked in your driveway. You do have a legal right to get any of your personal belongings from the car, either before title loan repossession or after.
Title Loan Car Sales in New Hampshire
After a title loan company repossesses a car, they can then sell that car to recoup their losses on the balance of the loan. This is another area where the state does borrowers no favors. As soon as the title loan company repossesses your car, they can sell it. Many other states again offer some type of grace period here, which is known as a right to cure, during which time you can catch up on your payments to get your car back. A title loan company in New Hampshire may offer this, but it’s not a legal requirement.
Once the title loan company sells your car, it will see if the proceeds of the sale are enough to cover what you owe. If there’s a deficiency, the title loan company can and will bill you for that deficiency. This can certainly add insult to injury when you’ve just had your car repossessed, especially if you’ve been paying exorbitant interest charges for months on end already.
Title Loan Fraud
When you get a title loan, the recourse that the title loan company has if you don’t fulfill your end of the bargain by making your payments is to repossess your car. This is typically where the situation ends, but there are a few types of title loan fraud that can result in the title loan company taking you to court.
The most common type of title loan fraud is intentionally concealing your car so that the repo man can’t find it and repossess it. The key here is the intent. Driving your car around like you normally would is fine. But if you’re parking your car in your friend’s garage every night and then walking home when you have plenty of parking in front of your house, a court is going to realize that you were trying to keep your car from being repossessed.
A more extreme type of title loan fraud is intentionally damaging your car before the title loan company is able to repossess it, so they can’t make as much money from the sale. Of course, this doesn’t work out well for you in the long run, because they’ll just come after you for the deficiency balance. Again, this comes down to intent. If you get in an accident, you obviously didn’t intentionally damage your car. If you pound it with a sledgehammer, that’s when a court might start to suspect that you damaged it on purpose.
Finally, you can’t transfer your car so it’s under someone else’s name after you’ve obtained a title loan. The title loan company will come after you in court if you do so to avoid the repossession of your car.
How New Hampshire Title Loan Laws Stack Up to Laws in Other States
When it comes to title loan laws, New Hampshire isn’t the best, but it’s also far from the worst. Interest rates are very high, but that’s true in almost every state, with Florida being one of the few that has actually managed to put a somewhat reasonable limit on title loan interest rates. Loan term lengths are the same in New Hampshire as they are almost everywhere else, and the limit on title loan amounts is high enough that pretty much every borrower can get as much as they need.
While the state’s laws regarding repossession and sales provide borrowers with almost no protection, its requirement that borrowers pay 10 percent of their loan principals or more on each loan renewal is great. It ensures that borrowers are at least making some progress on their title loans and not simply paying the title loan company money every month.
Considering all the drawbacks to title loans, why even get one in the first place? The target market of every title loan company is a high-risk borrower with a bad credit score and no other options. A title loan is almost never a person’s first choice, it’s the choice they make when they can’t get a loan anywhere else or they need money quickly.
Title loan companies use the fact that they lend to high-risk borrowers as an excuse for their extremely high interest rates, but this explanation doesn’t hold water. It would make sense to charge high-risk borrowers higher interest rates, but an APR of 300 percent isn’t just high, it’s significantly higher than the APR on almost any other type of loan. And it’s not like these title loan companies have no options if borrowers default on their loans. All they need to do is send in the repo man to get a car, and they can sell it to make back anything they lost.
In the event that you do need to obtain a title loan in New Hampshire or any other state, it’s important that you borrow as little as possible to minimize the amount of interest that you pay. You should also make sure that you’re going to be able to pay your title loan off by the first payment due date, because it’s just not worth it to pay multiple months of interest. After just two months, you’ll already have paid interest equal to half of what you borrowed.