LAS VEGAS, May 31, 2013 /PRNewswire-iReach/ -- Short-term auto title loans for consumers with bad credit carry a stigma: They're dangerous. They'll create a bottomless pit of debt. The title loan will cost the borrower their car.
Is the stigma accurate? Sometimes it is. That's why recent regulations imposed on the title loan industry are so important.
To date, the Nevada legislature has established consumer protections from predatory title loan companies in two different years, 2005 and 2007. Some highlights:
Lenders must be state-licensed.
How this protects the consumer: A state-licensed loan business is more credible, more responsible, and more accountable than an unlicensed entity.
Title loans must not extend past seven months, total. The maximum loan term is 30 days, renewable no more than six times.
How this protects the consumer: In a high-interest loan, time is money. A 300% APR loan can potentially repay itself three times every year, over and over. Nevada law caps the amount of time a loan can be extended, eliminating the ability of the loan company to trap consumers in an unescapable debt cycle.
The lender must give 30 days written notice prior to vehicle repossession.
How this protects the consumer: No vehicle repossession will be a surprise. Borrowers in default will have time to attempt the loan repayment or make alternative transportation plans.
In the event of a loan default, the lender can collect no more than the collateral vehicle as repayment for the loan.
How this protects the consumer: The lender is not allowed to pursue any other types of payment or assets beyond the vehicle itself. Once the vehicle is repossessed, the loan is ended, and the borrower is free from any further responsibility.
The lender can not offer a loan higher in value than the fair market value of the vehicle.
How this protects the consumer: A bigger loan means bigger payments, increasing the likelihood that the borrower will find themselves in default at some point during the course of the loan. This law also protects the lender; as the lender can not collect any payment beyond the vehicle itself in the event of a default, they are protected from overloaning themselves out of business.
The lender can not threaten a criminal process to collect on the loan.
How this protects the consumer: Title loan companies are not allowed aggressive collection practices. In a Nevada title loan, only the vehicle is at risk, not the borrower's security, sanity, or health.
Nevada still allows lenders some freedoms most other states do not. Nevada does not cap the amount of interest that can be charged per title loan, counting on the protections of time limits and collections policies to guard consumers.
In all business, some companies strive to keep customers happy, while other strive to squeeze out whatever profits they can. No government can fully protect a borrower. Anyone searching for an ethical car title loan company should know their rights, do their research, and read their contracts.
For reputable title loans in Las Vegas, look to this loan company.
This article does not offer legal advise. These are not laws, they are the summaries of laws interspersed with the author's opinons. Reference: NV State Legislature.
Media Contact: Sloan Carson, USA Money Today, 7026599576, Sloancarson78@gmail.com
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SOURCE USA Money Today