Missouri Title Loans – How the State Protects Consumers From Making Uninformed Title Loan Decisions

April 7, 2012 by  Filed under: Loans 

If you have bad credit and you find yourself in a financial bind, then a possible solution is a short-term title loan secured by your vehicle title. However, there are a few things you need to know before you borrow. One of which is that the title loan industry in Missouri is regulated by the Division of Finance. Tasked with the responsibility of protecting borrowers from unfair lending practices, the Division of Finance oversees title lenders throughout the state.

To ensure borrowers are fully informed of the consequences of defaulting on their loan, Missouri code 367.525 (1) requires the lender to provide potential borrowers with an official Notice To Borrower. The state mandates that this notice be given before the loan application is filled out.

The Notice to Borrower states:

  1. Your automobile title will be pledged as security for the loan. If the loan is not repaid in full, including all finance charges, you may lose your automobile.
  2. This lender offers short-term loans. Please read and understand the terms of the loan agreement before signing.
  3. I have read the above “Notice to Borrower” and I understand that if I do not repay this loan that I may lose my automobile.

Potential borrowers are required to sign the Notice to Borrower, acknowledging that they fully understand the consequences of default. By extracting a lot of legal jargon, so often found in disclosures, this Missouri mandate plainly states the adverse conditions of a title loan and safeguards consumers from confusion.

In addition to this required document, title loan lenders in compliance with section 367.525 (3) are responsible for posting a notice in their office that clearly states that “borrowing from this lender places your automobile at risk. If this loan is not repaid in full, including all finance charges, you may lose your automobile.” Lenders are also required to post the name, address and phone number of the Division of Finance in the event borrowers need to file a concern or a complaint.

Missouri’s finance laws make title lenders be completely forthright in their dealings with consumers. Most borrowers already know the conditions of a title loan, but for those that do not, Missouri has instituted policies to ensure they are fully informed before agreeing to a loan.

To enforce the policies that protect consumers from predatory lending, Missouri code 367.532 states that title lenders who “fail, refuse or neglect” to comply with these required notices, may have their license suspended or revoked. They may also be subject to civil penalties and fines.

Missouri title lenders may find less stringent laws in other states, but the demand for short-term, bad credit loans in Missouri, ensures title loan companies will continue to meet the consumer need, despite regulations.

Sarah has worked in the financial industry for many years, specializing in loans to people with bad credit. Currently, Sarah writes for a variety of websites, one of which offers title loans in Missouri.

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