CAR TITLE LOAN
REGULATIONS IN TEXAS

Companies that offer car title loans and other short term loans in Texas must comply with state licensing and consumer protection laws. Title loan companies in Texas operate as Credit Access Businesses (CABs), which are regulated by the Texas Office of Consumer Credit Commissioner (OCCC). These businesses often arrange or broker loans and must comply with specific state laws and regulations. To operate legally within Texas, these companies must be registered as a Credit Services Organization (CSO) with the Secretary of State and licensed as a Credit Access Business with the OCCC. With this dual licensing, lenders meet both consumer protection and state financial requirements.

Because title loans are structured as Credit Access Businesses in Texas, state lending regulations differ from those for traditional unsecured bank loans. Regulations can be inconsistent, misinterpreted, and sometimes overlap between state agencies, which is why borrowers should understand how Texas title loan laws actually function before agreeing to a loan.

In addition to state regulations, most major cities in Texas have enacted a Unified Ordinance that caps title loan amounts. At these locations, a title loan cannot exceed the lesser of 3% of a customer's gross annual income or 70% of the vehicle's retail value. For example, Houston has citywide ordinances that limit loan amounts and monthly payments for title loans. Licensed lenders in the city must also register each year with the city as a Credit Access Business, and there are additional restrictions on loan renewals and contract language.

Lending Laws For Texas Title Loan Companies

Before signing off on a title loan, it is recommended to evaluate the different lending terms and repayment amounts from multiple lenders. This includes a full review of the fees, interest, and expenses added to your loan. Licensed lenders in Texas must also break down the finance costs and other possible charges and explain your rights as a consumer in plain language. Borrowers must be provided with documentation explaining what happens after repossession, the auction process for your vehicle, and how surplus proceeds (if any) are distributed after the vehicle is sold. Per Texas Business & Commerce Code § 9.608, a lender must pay the borrower any "surplus" funds remaining after the debt and reasonable repossession costs are accounted for.

When you take out a new title loan or renew an existing one, your lender must detail the terms in your contract and specify the fees if you default on the monthly payments. Additionaly under local ordinances, a title loan can typically be renewed no more than 3 times. With every renewal or installment payment, these laws require that at least 25% of the principal be paid down. These ordinances allow your loan to be paid off after 4 payment cycles. After signing your loan contract, your lender must provide you with a copy of the agreement and specify the process and timeline for getting your car's title back after the loan is paid off.

APR And Interest Rate Restrictions on Title Loans in Texas

Every contract must include the complete repayment terms, including the total number of payments, the total amount of interest, and the total amount paid over the life of the loan. While Texas does not set a traditional interest rate cap for CAB's, the total cost of the loan must be shown and disclosed as an Annual Percentage Rate (APR) so you can compare the true cost versus other lending options.

If you pay off your title loan early, Texas law generally does not allow lenders to charge a payment penalty. In the past, some lenders have threatened to bring criminal charges against customers who miss a payment. They would do this if a customer missed a payment or defaulted on a payment. In such cases, the lender can repossess your vehicle since the loan is outstanding and the payment method was faulty. As you probably know, they can't arrest you or send the local sheriff to your door. Any company that threatens criminal acts should be avoided at all costs, as such actions violate state laws. Specifically, the Texas Debt Collection Act (Finance Code § 392) prohibits lenders from threatening prosecution or arrest for a civil debt, such as a title loan. Borrowers targeted by these illegal scare tactics can file a complaint with the OCCC or pursue civil litigation.

If your payment is returned due to insufficient funds or a bank error, you can still prevent repossession by contacting your lender. This includes the following:

1. Contact your lender to let them know there's been an error in your bank account, and the payment won't go through.
2. Following up in writing, such as email or mail, with the same information.
3. Send a “return receipt requested” letter to the lender indicated on your contract. The lender may or may not be the local office where you got the loan. 

Choose A Title Loan Company in Texas That Follows Local Regulations

Licensed title loan companies in Texas must post a copy of their current OCCC license at all physical locations, whether they offer storefront financing or online title loans. Online lenders in Texas must prominently display their state licensing information on their websites.

Ensure your lender's license is current and that they are legally authorized to offer title loans within the state. Do all you can to understand your citywide regulations and rules covering online title loan companies. While title loans are allowed in all cities in Texas, some cities and local jurisdictions have specific laws that regulate the amount you can borrow and what happens if a lender repossesses your vehicle.

Call Texas Title Loans at 844-243-3195 if you have any questions about Texas's current title loan regulations, which may change in 2026.