What is a South Dakota Title Loan?
A South Dakota title loan is simply the South Dakota variant of a title loan, a type of loan that is based on the premise that an applicant uses the title of an asset, usually a car, as collateral for a loan. In general, title loans are high-interest, short-term, and small-scale loans similar in functionality to payday loans. Legislation on title lending is always in flux, and thus regulations regarding title lending vary state to state. For a comprehensive overview on title lending, including the specific mechanics of title lending and the process by which one can get a title loan, please see our parent page for title loans here. South Dakota has, as recently as 2017, enacted new legislation relating to title lending. In this article, we will be focusing on South Dakota’s specific regulations to their title loan program. According to a new measure passed in 2017, title loans in South Dakota cannot have an interest rate above 36% APR – a huge difference from the national average for title lending of 300% APR. Title loans cannot last longer than one month, though they can legally be renewed up to 4 times. After the 5th renewal, the debtor must make a payment of 10% of the original loan, as well as keeping up with interest, for each subsequent renewal, up to 8 in total. Finally, if an asset is repossessed, any surplus funds (after paying off the loan, unpaid interest, and fees involved in repossession) must be returned to the debtor.
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In what has been hailed as a massive step in consumer advocacy, title loan interest rates have been capped at 36% APR, a massive step down from the national average of 300% APR.
South Dakota, like most other states, does not require credit checks as part of the title loan application process. Usually, all that will be required is an ID and proof of income.
South Dakota’s particular title loan laws are as follows: SL 2006, ch 245, § 13. Title loans cannot last more than one month. They can be renewed 4 times as is. Upon the fifth renewal, the debtor must pay 10% of the initial loan amount, plus continue to make interest payments, up to 8 total renewals.SL 2006, ch 245, § 14. Remaining funds from repossession (after paying off the initial loan, accrued interest, and legal fees associated with repossession) must be returned to the debtor.