There are 3 specific formalities:
- There must be given value by both parties
- The debtor must have rights to the collateral
- There must be an authenticated security agreement
In addition to Idaho Article 9 provisions, car title lenders must include the following information:
- Make, model and year of the vehicle
- VIN and license plate number
- Name, address and date of birth of the borrower
- Date the loan agreement is executed
- Maturity date of the car title loan agreement
Additionally, a secured creditor must “perfect” their interest to obtain priority over other creditors and purchasers, maintain perfection throughout changes in the collateral, the jurisdiction where the collateral is held, and the name of the creditor.
Article 9 enables the lender to repossess the car while avoiding any breach of the peace. Article 9 allows the lender to initiate an “Idaho Article 9 sale.” The borrower must be notified. The borrower is allowed to redeem their car if they pay off all the debt.
Car title loan lenders, per Idaho Article 9, must include a multitude of disclosures in each loan car title loan agreement.
- This loan is not intended to meet long-term financial needs.
- You should use this loan only to meet short-term cash needs.
- You will be required to pay additional interest and fees if you renew this loan rather than pay the debt in full when due.
- This loan may be a higher interest loan. You should consider what other lower cost loans may be available to you.
- You are placing at risk your continued ownership of the titled personal property you are using as security for this loan.
- If you default under this loan the title lender may take possession of the titled personal property used as security for this loan and sell the property in the manner provided by law.
- If you enter into a title loan agreement, you have a legal right of rescission. This means you may cancel your contract at no cost to you by returning the money you borrowed by the next business day after the date of your loan.
- If you believe that the title lender has violated the provisions of the Idaho Title Loan Act, you have the right to file a written complaint with the Idaho Department of Finance and the Department will investigate your complaint.
Along with these disclosure rules, the state requires that title loans be 30 days in length, but it allows them to be renewed automatically. There is no limit on the amount of interest a car title loan lender can charge for the loan, however it does limit the amount of the loan relative to the value of the vehicle. There are no limits on the number of times a loan can be rolled over (renewed), but Idaho Article 9 requires that on the third renewal of a loan, the debtor must make an additional principal payment and pay the interest due on the loan. The statute states: “The debtor shall be required to make a payment of at least ten percent (10%) of the principal amount of the original title loan in addition to any finance charges that are due.”
If the debtor defaults on the loan, the lender is required to mail a letter to the debtor informing the debtor that “the debtor has ten (10) days from the date of the notice in which to cure the default.” Additionally, the statute specifically prohibits lenders from collecting any deficiency from the debtor personally unless the debtor prevents repossession, damages the vehicle, or commits fraud, the lender’s only recourse is to repossess the vehicle.
How to Start a car Title Loan Business: AutomobilePawn.com