Most financing companies that offer short term loans and secured loans are licensed by the State of Texas. But, there’s a bit more that goes into regulations that govern online title loan companies in Texas. Therefore, it’s important to understand Funding Regulations and how they affect residents in our state. Many of these updates are covered by the Texas Office of Consumer Credit Commissioner. It’s also important to stay on top of recent changes to State Statutes with the Texas Department of Savings and Mortgage Lenders. Take note, some regulations can overlap between different state entities.

Besides state and federal regulations, each city may have its own regulations for companies that offer title loans in TX. As an example, Dallas has various citywide ordinances in place that place further restrictions on the amount you can borrow. Some ordinances limit the amount of money anyone can borrow by using their pink slip as collateral. Before you decide to get a vehicle equity loan, check with your city to see if they have additional codes and regulations on the books.

Lending Laws For Texas Title Loan Companies

Before you sign off on a Texas title loan, each company is required to review the costs of your loan. This includes a complete explanation of the fees and added costs that are added to your loan. Installment and payday loans operate under the same format. These lenders will also need to break down the finance costs and other possible charges. They must also explain in simple language what your rights are as a consumer. As an example, you have the right to get your vehicle back if it gets repossessed. Any company you work with should supply you with documentation that spells out exactly what you need to do if this happens. They will specify who you need to contact to file a complaint. This includes the name, address, and phone number of the agency.

Each time you take out a new secured loan, or extend the current one, the lender is required to explain every detail of the contract. The lender will detail your rights to you again and provide you with a copy of the new contract after signing. It’s a big red flag if a lender doesn’t want to do this. Most reputable Texas title loan companies will have no problem discussing what happens if you default or run into issues making payments on your loan.

APR And Interest Rates Restrictions on Title Loans in Texas

Every contract must include the exact payment terms. This includes the total number of payments and the total amount of interest. The contract should break this down for the life of the loan. It’s worth noting that it doesn’t matter which type of short term loan this applies to. It can be a payday loan or a car title loan. It will qualify as long as it’s determined to be a high dollar amount.

If you pay a title loan off early, you won’t be charged a penalty. In the past, some unscrupulous lenders have used the threat of bringing a criminal charge against a customer. They would do this if a customer missed 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.  As you probably know by now, they can’t arrest you or send the local sheriff to your door. Run from any company that threatens you with that as it’s likely they have no regard for other consumer protections.

You do have an option to prevent your vehicle from being repossessed in the case of a bounced check or debit payment. It requires three steps.

1. You must call the lender and tell them there’s been an error in your bank account and the payment won’t 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. Take note, the lender may or may not be the local office where you got the loan. This letter will inform them of the situation and who you spoke to. It will also include your 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 title loan company’s office.

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

Choose A Title Loan Company in Texas That Follows Local Regulations

Every financing business needs to post a copy of their current license in a location easily seen. It doesn’t matter if it offers store-front financing or online title loans. Online lenders in Texas must display a license in a prominent place on each page of the lender’s website. This also applies to companies that specialize in providing payday loans and cash advances. Texas regulates there is no distinction between an online lender or retail cash advance company.

It’s up to you to make sure that the license is current and that the lender has not been suspended or revoked. As we mentioned above, do all you can to understand your citywide regulations and rules that cover online title loan companies. We discussed this in an article about statewide regulations and city ordinances in many of the largest metro areas of Texas. Use this information at your discretion. The laws and ordinances are always changing so check with your local Government for the most up-to-date information.