HB326 Alabama 2016 Session

Summary

Primary Sponsor

Patricia Todd

Democrat

Session

Regular Session 2016

Title

Title loan lenders, licensure and regulation of, established, Alabama Title Loan Act

Summary

HB326 would create the Alabama Title Loan Act to license title loan lenders, cap interest, and strengthen borrower protections with enforcement provisions.

What This Bill Does

It creates a licensing system for title loan lenders overseen by the State Banking Department, including rules for default handling and repossession. It places tiered maximum annual interest rate limits on title loans and requires simple interest disclosure. It requires loans to be between 180 and 365 days and prohibits title loans to anyone under 19. It also provides remedies for borrowers and penalties for violators, including fines, possible criminal charges, and the option for borrowers to sue for violations.

Who It Affects

• Title loan lenders: must obtain and maintain an active license, operate at licensed offices, follow rate limits and consumer protections, and face disciplinary actions or fines if they violate the Act.
• Borrowers (consumers): gain protections such as rate caps, clearer loan terms, redemption and refund rights, and the ability to pursue penalties or damages if a lender violates the Act.

Key Provisions

• Licensing and regulation: title loan lenders must be licensed by the State Banking Department, with annual licenses displayed at the office and subject to regulatory examinations.
• Interest rate caps: maximum annual rates are 36% on the first $2,000, 24% on the next $1,000 (up to $3,000 total), and 18% on amounts above $3,000, calculated as simple interest and disclosed upfront.
• Loan term limits: title loans must have a term between 180 and 365 days.
• Age restriction: no title loans may be issued to borrowers under 19 years old.
• Loan agreements: lenders must provide a detailed agreement with borrower and vehicle information, amount financed, finance charge, total payments, APR, late fees, department contact, and a bold rights notice affirming borrower protections.
• Repossession and redemption: lenders must give notice before repossession, allow a 15-day redemption period, itemize costs, and return title upon full repayment; sale proceeds must be accounted for and returned to the borrower after deducting owed amounts.
• Enforcement and penalties: the department can deny, revoke, or suspend licenses; impose fines up to $5,000 per violation; borrowers can sue for actual damages plus double the finance charge; willful violations can be Class A misdemeanors.
• Unlicensed loans: any title loan made without a license is void; the borrower can recover payments and the lender must return title and property.
• Recordkeeping and reporting: licensees must keep records and file annual reports by December 1; the department will publish an analysis of title loan usage.
• Advertising and conduct: lenders cannot advertise as 'interest-free' or 'no finance charges' and must comply with prohibitions on certain improper practices; violations may trigger additional enforcement.

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