Most of us have seen title loan companies as we pass by on the street. Title loans allow people to quickly get cash from their vehicle’s title. This can be useful when someone is in a financial squeeze but knows they will have the money to pay the loan back soon. However, title loans are also risky. They have sky-high interest rates and penalties if they aren’t repaid within the loan’s terms. You could even lose the title to your vehicle to the title loan company. This may not affect you immediately but could damage your credit and create obstacles if you ever wish to sell or transfer the vehicle in the future. If you’re in a financial position where you’re considering a title loan, you might also want to consider filing for bankruptcy instead. If you’re in the Las Vegas area and want to speak to an experienced, knowledgeable bankruptcy attorney, call 702-370-0155.
How Do Title Loans Work?
Typically, to take out a title loan, you will need to bring your vehicle and its title to the title loan company. An agent of the company will assess the vehicle and its value and offer a loan based on those factors. This can be a plus for some borrowers because the loan isn’t dependent on their credit history or proof of income. The average title loan is about $1,000. The borrower may be presented with an option between paying the loan back in a single payment or installments. If the borrower opts for a single payment, it will typically be due about 30 days later and have an APR, or annual percentage rate, of about 300%. Installment payments have an average APR of 259% and typically must be repaid within 3-6 months.
Title loans can be a huge financial risk. Approximately 20% of title loan borrowers end up having their vehicle repossessed. This will hurt the borrower’s credit rating and take away their means of transportation. It will be more difficult to qualify for an auto loan when your credit report shows a prior vehicle repossession. Most car title lenders don’t report to the credit bureaus, so your timely payments and paying off the loan won’t do anything to help your credit. Another potential issue for someone relying on a title loan is a renewal. Only 12% of title loan borrowers will pay off their loan on time and without a renewal. Renewing a title loan stretches out its lifespan and the amount of interest the borrower will pay. Additionally, a renewal can come with a separate fee that will be added to the borrower’s loan balance.
Nevada Title Loan Laws
Nevada defines and sets forth laws regarding title loans, deferred deposit loans, high-interest loans, and check cashing services in Chapter 604A. Title loans are defined in Nevada by NRS 604A.105. Title loans by definition charge an APR of 35% or higher in Nevada. They also require the borrower to secure the loan by giving the title loan company the physical title to the vehicle or by perfecting a security interest naming the title loan company as a lienholder on the vehicle. NRS 604A.400 requires that all title loan companies in the state of Nevada operate with a valid license.
NRS 604A.5065 sets forth requirements for title loan companies when determining a borrower’s ability to repay. Factors the loan company should consider include current or reasonably expected income, credit history, employment status, and more. NRS 604.A5067 requires that all title loan contracts in Nevada must be in writing, as well as other requirements to make a title loan contract valid and legally enforceable in Nevada. NRS 604.A5068 sets forth requirements and limitations for a title loan company seeking to collect upon a past-due debt. The title loan company must always comply with the Fair Debt Collection Practices Act. This section also allows title loan companies to add extra charges to a loan balance, like court costs, costs of service of process, and attorney’s fees. You can find other laws regarding title loans that are specific to Nevada in Chapter 604A.
Learn More About Your Debt Relief Options With Our Nevada Bankruptcy Lawyers
If you’re struggling with debt, a title loan might get you out of a tough spot. However, many people who take out title loans pay more than triple back over time or even end up having their vehicles repossessed. Depending on your financial situation, the amount you can borrow from a title loan may only be a drop in the bucket and not be worth the risk. If you are on the verge of a major debt action, you may want to consider bankruptcy to address all of your debts at once. Bankruptcy provides far more protections and benefits for someone struggling with debt than a title loan. You may be able to keep your vehicle, or even surrender a vehicle that’s underwater without the typical associated penalties. But maybe you don’t have that much debt and have a fairly secure way to pay back your title loan within the loan’s deadline. At Las Vegas Bankruptcy Lawyers can give you an honest assessment of your financial situation and whether bankruptcy or some other option is the best way to handle your debts. Contact us through our online form to schedule your free debt evaluation, or call us at 702-370-0155.