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What is a Rhode Island Title Loan?

A Rhode Island title loan is a loan regulated by the laws of Rhode Island where the borrower uses an asset as collateral. This allows the lender, in the event of a default, to repossess the asset and sell it, using the money to pay off the remaining balance of the loan. Title loans are therefore generally easy to obtain; all that is required, in essence, is an asset (usually, a car) to provide collateral.

Because title loans are so easy to acquire and tend to be small and short-term, lenders will often charge high-interest rates. In some states, title lending is outlawed to prohibit predatory lending. For the states in which it is legal, there are laws restricting lending practices, such limits on loan amounts, interest rates, etc.

Table of Contents

Rates (%)

Some states have caps on the rate of interest a title loan lender can charge. In Rhode Island, these limits are:

  • 3%/month on loans for $300 or less
  • 2.5%/month on loans between $300 – $800
  • 2%/month on loans between $800 – $5000

Credit Requirements

Title loans are secured by the asset used as collateral, meaning the borrower’s credit generally does not affect eligibility. Typically, one will require only a lien-free asset (usually an automobile) and government-issued I.D. to obtain a title loan.

Laws

Rhode Island statute §19-14.2-8 states that:

  • Loans must not exceed $5000
  • Loans for $300 or less may not have an interest rate higher than 3% per month
  • Loans between $300 – $800 may not have an interest rate higher than 2.5% per month
  • Loans between $800 – $5000 may not have an interest rate higher than 2% per month

Additionally, statute §19-14.2-11. states that loans less than $1000 must be have a maximum payment term of 25 months, and loans between $1000 – $5000 must have a maximum term of 60 months.

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