HB400 Alabama 2015 Session

Summary

Primary Sponsor

Rod Scott

Democrat

Session

Regular Session 2015

Title

Title loan business, regulation and licensure, charges, fines, penalties, Alabama Title Pledge Act

Summary

HB400 would create the Alabama Title Pledge Act to license and regulate title pledge lenders, set loan charges and terms, and enforce the rules with fines and criminal penalties.

What This Bill Does

It would require title pledge lenders and their offices to obtain and maintain a license, post the license, and meet bonding, background check, and reporting requirements. It would set loan terms and charges for title pledge loans, including a maximum service charge equivalent to 36% annual percentage rate and limits on the amount financed per transaction (no more than $2,500). It would require detailed title pledge transaction forms and plain-language disclosures, including redemption rights, early payment allowances, and penalties for default and repossession. It would establish enforcement mechanisms through the state Supervisor of the Bureau of Loans, including inspections, license suspensions or revocations, civil penalties, and criminal penalties for violations; it would also clarify handling of records and complaints, and note that local government funding rules may be affected by a constitutional provision.

Who It Affects

• Title pledge lenders and title pledge offices: must obtain licenses (one per location), post licenses, pay initial and renewal fees, provide bonds or deposits, undergo background checks, maintain records, file annual reports, and face potential suspension, revocation, or penalties for violations.
• Pledgors (borrowers): would be offered regulated title pledge loans with specified terms, clear disclosures, a defined redemption period after default, and protections against deceptive practices, with limits on charges and a structured process for repossession and sale.

Key Provisions

• Establishes the Alabama Title Pledge Act to license and regulate title pledge lenders and offices and to set charges, interest, and fees for title pledge loans.
• Licensing requirements: separate license for each office/location; initial license fee $600; annual renewal $500; required bonds or cash deposits; fingerprints and FBI background checks; license posting; and transfer/change rules for ownership.
• Loan terms and charges: title pledge service charges may be used in lieu of interest up to 36% APR; other fees limited to stated late charges and actual repossession costs; the amount financed cannot exceed $2,500 per transaction; no penalties for early repayment; and a maximum maturity of 180 days to 1 year.
• Transaction form and disclosures: lenders must complete a consecutively numbered title pledge transaction form with borrower and property details, repayment schedule, total payments, APR, and late charges; forms must include required notices and borrower rights.
• Repossession and redemption: upon default, lenders must provide notices and allow a 15-day redemption period; after sale, the borrower may receive any surplus above amounts owed; costs of repossession and sale must be itemized.
• Consumer protections: prohibitions on misrepresentation, abusive collection, and trafficking in stolen property; restrictions on licensing and operations (e.g., age 19 minimum, no certain deceptive practices, and limits on debt secured by a single title).
• Enforcement and penalties: the Supervisor of the Bureau of Loans can suspend or revoke licenses, impose civil penalties up to $500 per violation, and pursue criminal penalties for willful violations; violations may also lead to bond forfeiture.
• Recordkeeping and reporting: licensees must keep records for two years, conduct annual reports by December 1, and the supervisor will publish analyses of title pledge activity.
• Local-government and constitutional notes: the bill is treated as creating a new local expenditure but is exempt from Amendment 621 requirements due to specified exceptions.
• Effective date: the act takes effect on the first day of the third month after passage and 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

Licenses and Licensing