HB 406 - Alabama Title Loan Act

• Establishes statewide licensing system administered by the State Banking Department for title loan lenders, requiring $1,200 application fee, $200 investigation fee, and $50,000 bond per license (maximum $250,000 aggregate per lender)

• Sets maximum interest rates tiered by loan amount: 36% per annum on first $2,000 of principal, 24% on $2,000-$3,000, and 18% on amounts exceeding $3,000, computed using simple interest

• Requires minimum 180-day loan terms, written agreements with specific disclosures, allows prepayment without penalty with pro-rata interest refunds, and prohibits late fees exceeding the greater of $18 or 5% of scheduled payment

• Permits repossession after 30 days of default and gives borrower 15-day right of redemption; lender must return surplus proceeds from vehicle sale after deducting principal, interest, late charges, and reasonable repossession costs

• Establishes enforcement authority for the State Banking Department to investigate violations, issue cease-and-desist orders, and impose fines up to $5,000 per violation; borrowers may pursue private actions for damages plus twice the finance charge