HB462 Alabama 2013 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Co-Sponsors

Demetrius C. NewtonNapoleon BracyMary Sue McClurkinJoe FaustJames E. BuskeyBarbara Bigsby BoydAllen TreadawayArtis McCampbellDarrio MeltonJamie IsonBecky NordgrenMark TuggleMike BallElaine BeechDavid ColstonLaura HallMerika ColemanJack WilliamsAlan HarperAllen FarleyDickie DrakeJohn F. Knight JrPaul BeckmanPatricia ToddPebblin W. WarrenRichard BaughnThad McClammy

Session

Regular Session 2013

Title

Alabama Title Loan Act, licensure by Banking Dept., bonds, fees, penalties

Summary

HB462 would create a state-regulated system for title loan lenders in Alabama, requiring licensure, bonding, and consumer protections for title loan transactions.

What This Bill Does

It creates the Alabama Title Loan Act and requires title loan lenders to obtain an active license from the State Banking Department, with a bond or equivalent security and annual fees. Licenses are issued for up to one year and can be renewed; there is also an inactive status and a six-month window to reactivate. The act caps title loan interest at 36% APR, governs extensions and repayment terms, and requires clear disclosures and borrower rights, including repossession and redemption procedures. It authorizes department enforcement, rulemaking, and allows stricter local ordinances; it also notes an exception regarding local fund expenditures under Amendment 621.

Who It Affects

• Borrowers and consumers who use title loans would gain clearer loan terms, protections against excessive charges, and formal procedures for redemption and refunds of certain costs.
• Title loan lenders, their owners/officers, and their employees would be subject to licensure, bonding, annual fees, reporting, examinations, and potential disciplinary actions or penalties for violations.

Key Provisions

• Establishes the 'Alabama Title Loan Act' and requires licensure by the State Banking Department for title loan lenders, including bond or certificate of deposit/letter of credit, and nonrefundable application and investigation fees.
• Licenses must be renewed annually (renewal fee $1,200); licenses may become inactive if not renewed and can be reactivated within six months for a $600 reactivation fee; licenses are non-transferable and must be displayed at the title loan office.
• Bonding requirement: $100,000 bond per license with aggregate cap $1,000,000; or an equivalent CD/letter of credit; department is beneficiary and claims are handled administratively.
• Disciplinary actions: the department can deny, suspend, revoke, or place licenses on probation; penalties include fines up to $5,000 per violation and other enforcement orders for various violations (fraud, misrepresentation, illegal charges, etc.).
• Title loan agreements must include detailed information (make/model/year, VIN, borrower details, amount financed, maturity after 30 days, finance charge, total amount due, APR, and required disclosures); a 14-point bold notice outlines repayment, late fees, default, and redemption rights.
• Interest rate and charges: maximum APR of 36% with restrictions on additional fees; extensions allowed in 30-day increments with no capitalization of unpaid interest; any excess charges are unenforceable or void with specific remedies.
• Repossession and redemption: lenders may take possession after default with notice; borrowers may redeem by paying due amounts within a 15-day window; if not redeemed, property may be sold and excess sale proceeds returned to the borrower after costs.
• Recordkeeping and reporting: lenders must maintain books/records at the title loan office (or other approved location) and file annual reports; original title loan agreements must be kept for at least two years.
• Enforcement and rules: the department can issue subpoenas, conduct examinations, enforce compliance, and adopt rules; emergency cease-and-desist orders may be issued for immediate danger to the public.
• Local governments: municipalities may adopt more restrictive ordinances; the act is exempt from certain Amendment 621 constraints due to its treatment of crimes, with local expenditure requirements addressed by specified exceptions.
• Effective date: licensees in operation on the act's effective date must apply for licensure by January 1, 2014; the act becomes law after the governor signs it.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Banks and Financial Institutions