SB381 Alabama 2014 Session

Summary

Primary Sponsor

Scott Beason

Republican

Session

Regular Session 2014

Title

Title loan business, licensure and regulation of, charges concerning title loans, definitions, penalties, Alabama Title Loan Act, Secs. 5-18A-3, 5-18A-12, 5-18A-13 am'd.

Summary

SB381 would license and regulate Alabama's title loan industry, cap interest and fees, tighten deferred presentment rules, and empower state agencies to enforce protections for borrowers.

What This Bill Does

Creates the Alabama Title Loan Act to license title loan lenders and offices, require bonds and background checks, and mandate annual license renewal with penalties for violations. Establishes specific interest and fee limits for title loans, requires full disclosures and borrower protections (including pro rata refunds for early payoff and clear repayment terms), and prohibits unlicensed lending (making such loans void). Aligns deferred presentment services with the act by tightening DP rules, requiring a real-time database to track DP transactions, limiting DP activity, and imposing penalties and enforcement provisions; also restricts certain DP practices with military members and requires strict disclosures. Enforces compliance through fines, possible license suspension or revocation, private borrower actions for damages, and other remedies, with the act taking effect after a short delay following enactment.

Who It Affects

• Title loan lenders and title loan offices: would need to obtain and maintain active licenses, post bonds or equivalents, undergo background checks, renew annually, display licenses, and comply with rate limits, recordkeeping, reporting, and enforcement provisions.
• Borrowers and consumers using title loans or deferred presentment services: would gain clearer disclosures, caps on charges, protections against unlicensed lending, limits on number of DP transactions, extended repayment options, and the right to seek damages or sue for violations.

Key Provisions

• Establishes the Alabama Title Loan Act to license and regulate title loan lenders and offices, including bonds, fingerprints, annual renewals, display of licenses, and department enforcement powers.
• Sets title loan charges: interest not to exceed 30% per year on the first $2,000, 24% on the next $1,000, and 18% on amounts over $3,000 (simple interest, disclosed at contract creation); no add-on interest and limited additional fees; pro rata refund of finance charges if repaid early.
• Requires unlicensed title loans to be void; licensees must follow strict recordkeeping, provide copies of agreements, and the license is non-transferable; bond or equivalent must be maintained for consumer protection.
• Requires detailed title loan agreements with vehicle details, borrower information, payment schedules, APR disclosures, late fees, and a prominent 14-point bold notice about rights and refunds; provides for borrower pamphlets and copies of agreements.
• Defines repossession rules: lenders may take possession after default with notice, and redeem by paying all amounts due within 15 days; outlines costs, sale proceeds, and return of title upon full repayment; requires commercially reasonable conduct in disposition of collateral.
• Imposes Deferred Presentment Services Act (DP) amendments: DP licensees must be licensed and adhere to DP limits (e.g., aggregate DP advances/cases not to exceed $500; up to six DP transactions in 12 months; extended repayment options up to four monthly installments); end-dates and disclosures must be clear, and DP activity tracked in a supervisor-designated or private database with real-time access.
• Military and advertising restrictions: prohibits DP transactions with active duty military members or their spouses/dependents unless compliant with the Military Lending Act; bans certain terms like 'interest-free loans' or 'no finance charges' from DP advertising.
• Enforcement and remedies: department may deny, suspend, or revoke licenses, issue cease-and-desist orders, and seek injunctions; borrowers may pursue private actions for damages (including attorney’s fees); violations can be Class A misdemeanors with fines or imprisonment; double damages (twice the finance charge) may be awarded to borrowers for certain violations.
• Effective date and local funds note: act becomes effective three months after passage; bill acknowledges potential local fund expenditures but is structured to fall within exceptions that avoid requiring local approvals; sections related to DP and title loans amend existing Alabama code sections (5-18A-3, 5-18A-12, 5-18A-13).

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