HB681 Summary

• Creates the Alabama Title Pledge Act to regulate title loan businesses separate from the existing Alabama Pawnshop Act, requiring licensure of title pledge lenders by the Supervisor of the Bureau of Loans in the State Banking Department.

• Establishes a 30-day title pledge agreement whereby lenders provide loans in exchange for security interest in unencumbered titled personal property, with pledgors having the right to redeem property by repaying the full loan amount.

• Limits title pledge service charges to 25 percent per month of the principal amount advanced, with detailed transaction form requirements and record-keeping obligations maintained for two years.

• Requires lenders to be licensed with a $600 initial fee and $500 annual renewal fee, post a $50,000 bond per location (up to $250,000 aggregate), undergo background checks, and comply with restrictions on loan amounts (maximum $2,500 per title), borrower age (minimum 19 years), and prohibited practices.

• Establishes criminal penalties for unlicensed operation (misdemeanor with up to $1,000 fine and one year jail time), false records (up to $1,000 fine per violation), and failure to record transactions (felony on second offense with up to $5,000 fine and 1-5 years imprisonment).