What You Need to Know
In the state of Idaho, title loans, and by extension their lenders, are regulated so the rules your lender must follow have been laid out, which gives you the benefit of advance knowledge of what is or is not allowed. For starters, title loan lenders are required to obtain a license, and if they give loans without a license, the loans will be void.
A title loan lender without a license is not be allowed to collect any money from a borrower and would be forced to return any money already paid, including interest and fees. In addition, the lender will have to return the motor vehicle’s title, relinquish any interest in your title, return the vehicle if repossession has occurred, and/or give fair market value for the vehicle if it has already been repossessed and cannot be returned.
State regulations also require that your lender make a number of written disclosures to you at the time of your loan agreement. It is crucial that you consider these disclosures. That includes the following information and statements:
- Title loans should be used to meet short-term cash needs and not long-term financial needs.
- You will have to pay interest and fees if the loan is renewed and not paid in full at the due date.
- This loan may be a higher interest loan, and you should consider other lower cost loans.
- By taking out this loan, you are risking the ownership vehicle of the vehicle you’re using as collateral.
- If you default on the loan, your lender may repossess and sell your vehicle.
- If you take out this loan you still have until the next business day to change your mind, just return the money you borrowed.
- If you think your lender has violated the Idaho Title Loan Act you can file a written complaint with the Idaho Department of Finance.
The amount of your loan will be decided by you and your lender. You will also decide and agree to the amount of interest and related fees you have to pay. You will enter into a written agreement detailing what you must pay and when. You and your lender should sign the loan agreement, and you shall be provided with a copy.
It should also include specific details like a precise description of your vehicle, the date of the agreement, and you and the lender’s contact information. Your lender should also make you aware of the address of the administrator and provide a telephone number where you can make complaints about the lender or lending process.
Title Loan Terms & Extensions
Title loans can last no longer than 30 days but are automatically renewed unless all fees have been paid, you have surrendered your car in lieu of paying the debt, or your lender has notified you in writing that the loan will not be renewed. If your loan is automatically renewed, you should be notified in writing within 14 days in person or by mail.
If a loan has been renewed three or more times you will have to pay at least 10% of the balance of the loan (including fees) at the time of renewal. If you cannot make the 10% payment, your lender may defer payment to a later date, but cannot add any more fees to that amount.
How You’re Protected from Repossession
If you have defaulted on your loan, the first step your lender must take is to mail you a Notice to Cure Default, which will give you 10 days from the date of the notice to pay your balance. (If you voluntarily surrender your vehicle to your lender, they will not need to send you a notice.)
If payment is not made within those 10 days, then your lender may repossess your vehicle, continue to charge you interest and fees related to your balance until the date of repossession, and charge you a reasonable amount for expenses they incurred during the repossession. Your lender is not required to give you any additional notice before repossessing your vehicle after the expiration of the 10-day ‘cure period’.
Once your vehicle has been repossessed that does not mean your responsibilities have ended. Your lender will sell your vehicle to recoup the money they are owed. Before doing so, your lender must provide you with a written notice of sale detailing when and how the car plans to be sold, your liability if the car sells for less than what is owed and details of how the proceeds of the sale will be applied to your debt.
Further Obligations & Fees
If the car sells for at least the amount that you owe, including any fees related to repossession, then you’re obligation is complete, and if it sells for even more than what you owe you’re even entitled to the excess. For example, if the car sells for $10,000 and you only owe $3,000 then you can collect the remaining $7,000. However, if the car sells for less than what you owe then you still owe your lender the remaining balance. To use another example, if the car sold for $3,000 but you owed $10,000 then you would still owe $7,000.
Your lender is expected to act reasonably in selling the car and trying to cover the amount of your debt. If you think he/she has acted unreasonably, then you can challenge the amount of shortfall between what is owed and what was recovered from sale.
“Idaho Statutes” Idaho Legislature, 2017,