Does Texas Offer Title Loans?

You’re a Lone Star State resident and suddenly, you’re in need of quick cash. You’ve heard of title loans, and it seems you might qualify. You’re hopeful, because you’re ineligible for a bank loan and want to avoid a predatory payday loan. But you wonder, does Texas even offer title loans? It does, but with some provisos.

Explain Title Loan

This is a short-term loan that’s usually based on the equity in your vehicle, for which you need a clean title. Eligible vehicles include automobiles, trucks, boats, RVs, or motorcycles. Your vehicle will serve as collateral, so you likely won’t need good credit.

Such loans can be used however you like; people usually get them to cover emergencies. In Texas, terms are usually between 15 and 180 days.  

Regulations Specific to Texas

In Texas, interest for such loans is capped at 10 percent. Some companies skirt this rule by claiming Credit Access Businesses (CAB) designation, which allows them to serve as go-betweens, when it comes to borrowers and lenders. 

These businesses process loan applications and recommend lenders. In exchange, you’ll pay a fee plus the loan interest charged by the actual lender. While there are no restrictions, in terms of fee amounts, the total levied must be disclosed to the borrower before the loan is made.

While you can ask for whatever amount you want, you must be able to pay the loan off within 180 days. You can renew an initial 30-day loan five times before you’ll need to come up with the whole amount. Otherwise, your vehicle will be seized and sold to cover the loan.

Additional rules in some Texas municipalities include restrictions on loan amount eligibility.

What About Interest Rates?

If you’re a Texas resident and need a title loan, you’ll be glad to know that such loans in your state carry some of the lowest interest rates in the nation. That’s in addition to the loan cap of 180 days. In Texas, the median loan term is 29 days, and borrowers generally must pay an average of $21 for every $1,000 borrowed. And as we say, the interest rate may not exceed 10 percent – IF they’re an actual lender and not a CAB.

Am I Eligible for a Title Loan?

Title loans in Texas require you to have a lien-free title. You also must prove you have the income to cover your loan. Other than that, you’ll need to be at least 18 and have a government-issued photo identification.

You must also provide your full name, date of birth, phone number, and address, as well as certain details about your vehicle, including make, model, and year, and how many miles are on it. Depending on the lender, you may need to supply vehicle photos. 

What Happens if I Can’t Pay?

In Texas, your vehicle can be repossessed if you’re a week late – with no notification required. You also may have to cough up fees including for towing, rekeying, and any costs pertaining to peddling the vehicle at auction. In addition, you may have to compensate the individual who seized your car.

Note, too, that lenders aren’t required to refund to you any difference between the selling price and fee totals. What’s more, you may be on the hook for the difference, if the vehicle’s sale amounts to less than what you owe.

Am I Protected?

You do have protections. For instance, borrowers must have a reasonable opportunity for loan repayment before the vehicle is sold. Scofflaw lenders are fined up to $1,000. Also, title lenders in Texas must be licensed by the states.

So, yes, Texas does offer title loans, but considering all the loopholes and such regarding CABs, you want to be sure the company in which you’re interested is credible and above board. We recommend ChoiceCash, which is serviced by LoanMart.