What You Need to Know
In Louisiana, title loans are legal and regulated even though there are not any specific title loan laws. Title loans are regulated in the same way as other short-term loans. There are safeguards in place to protect you from potentially unethical title loan lenders. If you end up getting a title loan, your lender will need to be able to place a lien on your title, so he/she has the option of repossessing your vehicle and recouping his/her money in the event you don’t pay your loan back in time.
Whether or not you will ultimately be eligible or approved for a title loan is entirely up to the lender and any policies he/she may have in place in addition to the minimum the law requires. For example, when deciding the size of the loan, you can get a lender may consider your level of income and the current market value of your vehicle. In addition, you may be required to take additional steps like obtaining and maintaining insurance on your vehicle.
The state does specify that title loans cannot be made for less than $350 and you must be given at last two months to pay it back. However, you can decide to pay off the loan before the two months period ends, and you cannot be charged any sort of fee or penalty for paying it off early. If you need to borrow less than $350, a title loan is not an option for you. If you need more than two months to pay your loan off you may still be able to get a title loan, the loan’s length is something you can discuss with your lender.
When deciding on whether or not to take out a loan you and your lender should discuss the loan length and the interest to be charged. In addition to any other obligations, you will have under the loan, including fees, a requirement for insurance, et cetera. Before agreeing to anything, all of the terms must be presented to you in writing.
How You’re Protected from Repossession
If you know you will not be able to make your loan payment before the due date, you may be able to enter an extended payment plan. If your lender agrees to an extension, the terms should be laid out in a separate written agreement. It is required that you be given at least four substantially equal payments evenly spread out to pay off your balance. The first payment must be at least 30 days away unless you ask for less. You can prepay or pay in full at any time. No additional interest or fees may be charged for doing so. If you are unable to make your payments under the extension plan, then you will be in default, and your vehicle will once again be at risk of repossession.
Your lender should notify you of the fact that you have defaulted on your loan and of his/her intention to repossess your vehicle. That does not mean that you will know the exact time and place when they will attempt repossession. The state of Louisiana does not require your lender to give you any additional notice before your vehicle can be repossessed. This does not stop you and your lender from agreeing to surrender your vehicle for sale or arranging any alternative agreement between yourselves.
If your car is repossessed with personal property in it, you have 10 days to notify your lender that you want those items, and they will have to arrange to return them to you. If you do not notify them after 30 days, the property is considered abandoned, and there is no requirement for it to be returned.
Once your car has been repossessed, but before it has been sold, you may still be able to make a payment and prevent your car from being sold. The payment would have to be equal to your loan balance, which includes interest and fees. Plus any additional fees related to repossessing and selling the vehicle, including legal fees. Your lender should send you a notice of sale before selling your vehicle.
Further Obligations & Fees
If you are still not able to make a full payment, then your vehicle will be sold, but that does not end your obligations under the loan agreement. Your lender should give you a notice of disposition after the sale, which will outline what you owe and what the car sold for. If the car sold for more than your balance, then you are entitled to the excess, but if the car sells for less than you are still liable for the shortfall and may be sued for the balance.
Louisiana State Legislature, 2017,