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Texas Car Title Loan Laws and Regulations


In Texas, title loans are legal and regulated by the state, with specific laws and regulations to ensure consumer protection.

Here’s an overview of what you need to know:

  1. Legal Framework: Title loans in Texas are governed by the Texas Finance Code under Title 5 Protection of Consumers of Financial Services. These regulations require lenders to disclose the total fees, interest rates, and loan terms before disbursing the loan.
  2. Interest Rates and Fees: Texas law caps the interest rate for title loans at 10%. However, lenders can charge unlimited fees, as long as they disclose these to the borrower. Some lenders operate as Credit Access Businesses (CABs), which allows them to charge additional fees for arranging loans between third party lenders and borrowers.
  3. Loan Terms: The maximum duration for title loans in Texas is 180 days. Borrowers can’t renew a 30 day title loan more than five times before the initial loan is due in full.
  4. Repossession Laws: If a borrower defaults, a lender can repossess the vehicle without needing court permission and without having to give prior warning to the borrower. Repossession is generally a last resort due to its associated costs.
  5. Borrower Requirements: To qualify for a title loan in Texas, borrowers must have a clear car title, a steady income, be at least 18 years old, and have a valid government photo ID. Additionally, they must provide personal and vehicle details.
  6. City Specific Regulations: Some cities in Texas have additional regulations. For example, Austin, Dallas, San Antonio, and Houston limit title loans to either 3% of the borrower’s annual income or 70% of the vehicle’s market value, whichever is lower. In Killeen, lenders must ensure that the loan is less than 20% of the borrower’s monthly income.
  7. Consumer Protection: To prevent predatory lending, all lenders must be licensed by the state. False advertising, charging for insurance, and serving military members with title loans are considered predatory practices and are penalized.

For a complete and detailed understanding of title loan laws in Texas, it’s important to consult the Texas Finance Code and stay informed about any changes in legislation.

Protection of Consumers of Financial Services

In the Texas Financial code there are protections for borrows. You can read all about them. They are covered under Texas Financial Code, Title 5.