What You Need to Know
The state of Nevada has a number of legal safeguards in place to regulate title loans. These legal protections are meant to help level the playing field between you, the borrower, and a potentially predatory lender. For example, to help avoid the cycle of unpaid debt and leaving your vehicle subject to repossession, the state limits the amount of any loan you may be considering. You cannot get a loan with a monthly payment that is more than 25% of your expected pre-tax income. Overall, your lender must take into account your current and expected income, and overall likely ability to repay the loan.
If these safeguards were not in place, then a borrower would have the potential to more easily get stuck in a cycle of debt. She/he might be unable to make monthly payments, making their vehicle likely to be repossessed. Even fighting against losing their vehicle could be pointless if it is not worth what they owe. Though because the vehicle is being used as collateral, a lender would be unlikely to lend you more than the market suggests it is worth even without these legal protections.
Terms & Extensions
The original length of any loan you get cannot be more than 30 days. However, the length may be extended up to six times with each extension still lasting for no longer than 30 days. You cannot be charged more interest during the extension than during the original loan, and no additional fees may be charged for extending the loan. However, before you can extend the loan you will have to pay the interest. If you have borrowed $800 at a 25% interest rate and you wish to extend the loan, you will need to pay $200 (25% if 800) before an extension may be granted.
During negotiations with your lender, you should be given a written loan agreement that you may later agree to. At that time, it will become the basis of your contract with your lender. The loan agreement should include the following information:
- Name and address of the borrower and lender
- The details of the vehicle used as collateral.
- The date and amount of the loan, interest rate, charges, number of payments, payment schedule, list of fees to be charged.
- A disclosure that if you take out a loan and then change your mind for any reason you have until the close of business the next day to return the money and rescind the loan at no additional cost to you.
- A disclosure that if a borrower defaults on the loan, the lender must offer a repayment plan before taking any other civil action or repossessing a vehicle.
How You’re Protected from Repossession
Defaulting on your loan is serious and puts your vehicle at risk of being repossessed. However, the state of Nevada does have safeguards in place to help give you time to get current and save your vehicle. Before repossession can be commended, your lender must offer you a repayment plan within 15 days of your default. The plan has to give you up to 30 days after the date of default to pay off your balance.
If you do not accept the repayment plan, or fail to pay according to those terms, too your vehicle may be repossessed and sold. If you are unable to pay selling your vehicle is the only way your lender can get their money back. Title loans in Nevada are set up to affect your vehicle only and make repossession and sale an even bigger priority than in other title loan situations. In other states in lieu of, or sometimes in addition to, repossession and sale of the vehicle a lender is allowed to sue a borrower. Either for the amount, he/she is in default, or for the amount of difference between what is owed and what the car sells for after being repossessed.
In Nevada, a lender cannot sue you for the amount you are in default. They can only sell and repossess your vehicle. Even if your vehicle is sold and sells for less than what you owe the lender, he/she can’t sue you for the remainder. If you owe $4,200 on a loan in default, your car is repossessed and sold for only $2,500 your lender has no legal recourse to recover the $1,700 he/she is still owed. Unless of course, your lender alleges you are to blame for the vehicle’s low sale price like you damaged the vehicle so that it sold for less.
References
“Deferred Deposit Loans, High-Interest Loans, Title Loans and Check-Cashing Services” Nevada Legislature, 2018,
https://www.leg.state.nv.us/NRS/NRS-604A.html
In his role as our dedicated “numbers guru,” Tracy takes charge of Titlelo’s financial planning, analysis, and forecasting. With an impressive 20-year accounting background working alongside CPA and high-tech firms, we rely on him to steer our fiscal ship towards continued success. Tracy’s invaluable contributions to our team are characterized by his hands-on approach and unwavering commitment to precision. With his expertise, we are empowered to implement inventive, pragmatic, and results-focused financial strategies, propelling Titlelo’s clients to new heights.