If you are one of the thousands of people that may be considering the option of getting a car title loan in Texas, it’s important that you understand the Texas Title Loan Regulations covered by the Texas Fair Lending Act.

It’s important to note that in addition to the state regulations, each city may have additional regulations that govern these loans.

Before you decide if you choose to get an auto title loan, check with your city to see if they have added codes and regulations to those of the state.

Overview of Title Loan Regulations in Texas

Before you sign off on ant Texas title loan, the company is required to go over the costs of your loan. This includes a complete explanation of the fees and added costs that will be added to your loan.  They must also explain in simple language what all your rights as a consumer are and the who specifically you need to contact in case you need to file a complaint (including the name, address and phone number of the agency.)

Every time you take out a new loan or extend the current loan, the lender is required to explain every detail of the contract and your rights to you again as well as providing you with a copy of the new contract after it is signed.

Every contract must include the exact payment terms, the total number of payments, the amount of interest, the total amount of interest for the duration of the loan and a clear statement that if you pay the loan off early, you will not be charged a penalty.

In the past, some unscrupulous lenders have used threat of bringing a criminal charge against a customer if they skipped a payment or if a check or debit payment bounced. The lender, in such cases, can repossess your vehicle since the loan is outstanding and the method of payment was faulty.

You do have an option to prevent a repossession the first time – and only the first time – in the case of a bounced check or debit payment.

It requires three steps.

1. You must call the lender and inform him that there has been an error in your bank account and that your payment may not go through.
2. You must email the lender with the same information.
3. You must send a letter, “return receipt requested” to the lender indicated on your contract – which may or may not be the local office where you got the loan – informing them of the situation and who you spoke to – first and last name as well as the date and time of your call to them. This letter must be postmarked on the same day that you spoke to the representative at the lender’s office.

Once those three steps are taken, the lender must allow you to make reasonable arrangements to make up the payment.

Your Obligation to Choose a Reputable Lender

Every car title loan business – whether store front or online – is required to post a copy of their current license in a location easily seen.  If they are an online lender, the license must be displayed in a prominent place on each page of the lender’s website.

It’s up to you to make sure that the license is current and that the lender has not been suspended or revoked.