HB406 Alabama 2014 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Co-Sponsors

Juandalynn GivanJohnny Mack MorrowSteve McMillanRalph HowardArtis McCampbellHarry ShiverDexter GrimsleyK.L. BrownPebblin W. WarrenAllen FarleyAlan BakerRichard BaughnDickie DrakeMerika ColemanChris EnglandGreg BurdineAlan HarperBarbara Bigsby BoydDarrio MeltonDan WilliamsDaniel H. BomanMike BallJack WilliamsAllen TreadawayTerri CollinsGeorge “Tootie” BandyJohn RobinsonJamie IsonJohn F. Knight JrRandy DavisDavid SessionsJim PattersonRon JohnsonPatricia ToddKen JohnsonLaura HallDimitri PolizosKurt WallaceMary MooreAdline ClarkeElaine BeechMicky HammonJoseph C. MitchellBerry ForteJames E. BuskeyMary Sue McClurkinJoe FaustBecky NordgrenDonnie ChesteenHoward SanderfordMark TuggleWayne JohnsonNapoleon Bracy

Session

Regular Session 2014

Title

Title loan business, licensure and regulation of, charges concerning title loans, definitions, penalties, Alabama Title Loan Act

Summary

HB406 would create a statewide licensing and regulatory framework for title loan lenders and offices in Alabama, with defined terms, rate limits, and enforcement.

What This Bill Does

It requires title loan lenders and their offices to be licensed by the Alabama State Banking Department and sets up rules for how title loans must work. It establishes rate caps, required disclosures, and duties around contracts, records, and redemption, and it creates penalties and a private right of action for violations. It also clarifies local government funding concerns and sets an effective date for the new regime.

Who It Affects

• Title loan lenders and title loan offices must obtain and maintain licenses, post bonds or other security, follow regulated practices, and be subject to oversight and penalties.
• Borrowers who use title loans gain defined protections, including rate structure limits, documented disclosures, redemption rights, and the ability to sue for violations.

Key Provisions

• Establishes the Alabama Title Loan Act to license and regulate title loan lenders and offices through the Alabama State Banking Department.
• Defines key terms such as borrower, title loan agreement, licensee, title loan office, principal balance, and titled personal property.
• Requires licensure with annual renewal; licenses are not transferable; bonds of $50,000 per license (up to $250,000 aggregate) or an equivalent deposit/letter of credit; fingerprints for applicants; and a minimum initial licensure deadline (existing lenders have until Jan 1, 2015).
• Imposes tiered interest limits: up to 36% per year on the first $2,000, 24% on $2,001–$3,000, and 18% on amounts above $3,000; requires full disclosure of the rate and prohibits add-on interest or extra fees beyond late charges and repossession costs; permits refunds for prepaid amounts on a pro rata basis.
• Requires detailed title loan contracts and disclosures, including vehicle info, borrower details, dates, installment schedules, and a 14-point bold statement about rights and duties; lender must provide an exact copy of the contract and a consumer rights pamphlet.
• Governs possession and redemption: lenders may take possession after notice if payments are 30 days overdue, with a 15-day redemption period and itemized costs; proceeds from sale must be returned after deducting owed amounts and costs.
• Enforcement and remedies: the department can discipline licenses and impose fines (up to $5,000 per violation); borrowers have private rights of action and may recover actual damages plus twice the finance charge, plus attorney fees; violations can be treated as unfair or deceptive trade practices.
• Records and reporting: lenders must keep detailed records and file annual reports; the department may inspect and examine licensees and publish an annual analysis of title loan use in Alabama.
• Local government provisions: municipalities may impose stricter rules without repealing existing laws; the act is excluded from certain local funding amendment requirements as defined in the Constitution; the act becomes law a few months after governor approval.

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

Subjects

Title Loan Businesses