RICHMOND, VA (WWBT) - If you plan to take out a title loan on your car or truck, some changes have just taken effect. As of last Friday, the state is now regulating these loans.
Title loans are high interest loans you can take out against your car or truck. Interest is often higher than 300%. There have been no laws regulating title loans, until now. And now they're under the watchful eye of the State Corporation Commission.
Said Ken Schrad with the SCC, "The Commission's charge now is to regulate this industry, to ensure that any licensee is following the law, and the rules and regulations are in place for making motor vehicle title loans in the Commonwealth of Virginia."
The General Assembly passed the law to help protect borrowers from getting too deep into debt. Now the loan terms must not be longer than one year, cannot be for more than half the car's value, and you can't owe money on the car. If your payments are more than 60 days late, lenders have to stop charging interest, you must get a notice before your car is repossessed or sold, and you cannot be charged storage fees.
Explained Schrad, "The statute provides for a lot of consumer information to be passed along to intended borrowers, so that they understand the terms of the loan, what the loan is really for and what's at risk if they take a motor vehicle title loan."
Interest on the loans will be limited to 22% per month for loans under $700, 18% per month on loans under $1400, and 15% on loans over $1400. All title lenders must now be licensed by the SCC.
Said Schrad, "In total of the 16 applications, they have 216 offices scattered around the Commonwealth. So its not unusual for one particular company to have multiple stores throughout the Commonwealth."
The total number of title lenders in Virginia is not known because they weren't regulated before. Lenders who operate without a license or break the new law can be fined or shut down by the SCC. Said Schrad, "Staff will conduct routine audits and actually go to offices to make sure they have the paperwork on file and are doing the things that are necessary under the statute."