SB331 - Alabama Title Loan Act Summary

• Creates the "Alabama Title Loan Act" requiring title loan lenders to obtain a license from the State Banking Department; establishes application requirements including a $1,200 nonrefundable application fee, $200 investigation fee, and a $100,000 bond per license (capped at $1 million aggregate).

• Caps interest rates at 36 percent annual percentage rate on title loans secured by motor vehicle titles; limits late fees to $18 or 5 percent of payment, whichever is greater; prohibits prepayment penalties and insurance charges.

• Establishes borrower protections including 30-day loan terms, 15-day redemption period after vehicle repossession, right to surplus proceeds from vehicle sales, and requirements for written title loan agreements with specific disclosures and warnings.

• Authorizes the department to deny, suspend, or revoke licenses for violations including fraud, misrepresentation, unlicensed operation, improper charges, and criminal convictions; imposes administrative fines up to $5,000 per violation.

• Makes unlicensed title loans void and subjects violators to Class A misdemeanor penalties; prohibits title loan lenders from engaging in pawnbroking and operating under military lending restrictions.