Over the past several decades, securities lending has become a popular type of financing in several states. This line of credit allows a borrower to obtain a loan against his vehicle title which serves as collateral. Instead of doing a credit check, lenders examine the value and condition of the vehicle before deciding on the loan amount. To safeguard its interests, the lender places a lien on the title of the car. In the event of reimbursement on time, the creditor returns the title of the car to its original owner. However, default on payment grants the lender a right of repossession which enables them to repay outstanding debts on the proceeds from the sale of the vehicle. But each state has its own rules and regulations governing securities lending laws. For example, the laws of the states of Alabama and Georgia allow lenders to keep the excess sale proceeds in addition to paying off the entire loan. While in other states, securities lending laws work differently. Some states categorically prohibit securities lending laws while others have moderate restrictions on securities lending. Thus, having prior knowledge of the governing state laws is imperative for borrowers as well as lenders. Below is a list of securities lending laws that will help you better understand the regulations in various states around the world.
States that Strictly Prohibit Securities Lending
If you live in any of the following states, beware. These states have banned securities lending in any form. But you have the option of contacting credit companies who can work out legal methods to help you acquire title loans. In some cases, lenders are willing to offer an annual percentage rate of less than 300% in this category. Alaska, Florida, Hawaii, Indiana, Maine, Montana, New Jersey, New York, Ohio, Oklahoma, Pennsylvania, Rhode Island, Maryland, North Carolina, Washington , West Virginia and many others have strict laws restricting securities lending.
On the other hand, the legal framework of Kansas, South Carolina, California and Louisiana allows lenders to offer securities loans through existing loopholes. South Carolina and California have separate regulations to prohibit securities lending. States prohibit the value of interest below a threshold for each type of loan. While in Kansas more restrictive laws are in practice that make securities lending illegal. However, lenders can avoid this regulation by properly restructuring title loans. There are other ways to avail title loans in states like these. All you need is a legal expert who can guide you every step of the way.
States with easy access to securities lending
Several states have introduced laws that support securities lending in general. This means that states have not put in place any modest restrictions that encourage many lenders and borrowers to engage with each other. To name just a few states, Alabama, Arizona, Delaware, Georgia, Idaho, Illinois, Missouri, New Hampshire, New Mexico, South Dakota, Texas, Virginia and Tennessee are the best states to qualify for title loans.
Statements with no limit on securities lending
The following states have laws which are beneficial for lenders because they have not set any limit on the maximum limit of loan value and interest rate. Delaware, Idaho, Illinois, Missouri, Nevada, New Mexico, South Dakota, Utah, and Wisconsin are states that fall into this category. To give a few examples: in Illinois, the interest rate can go up to 36% while the Texas securities lending laws regulate the term of the loan to a period of 180 days or 6 months. Utah title lending is flexible, making it an ideal state for title lending. Virginia laws prevent local lenders from granting auto loans to active, in-service members.
Whether you are a first-time borrower or have had an exceptional credit rating in the past, understanding the securities laws applicable to the state in which you live is essential. You can consult a financial advisor to get a better idea of what works and what doesn’t for you depending on your financial needs.