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What is a Virginia Title Loan?

A Virginia Title loan is an asset-based loan subject to the relevant laws and regulations of the state of Virginia. Since title loans are secured by an asset, such as a vehicle, which the borrower puts up as collateral, lenders are typically not required to perform credit checks or put a rigorous effort into ensuring that the borrower is in a stable position to be taking out a loan. What’s more, while title loans may seem safe in light of their relatively small amounts (on average ~$1000) and short-term payment periods (usually 30 days), they are known to be characterized by high-interest rates (often 25% monthly), as well as the option of multiple renewals. Title loans have hence typically been associated with predatory lending habits that end up placing borrowers deeply into debt. In February 2018, a report by the Center for Responsible Lending and the Consumer Federation of America found that the average title loan is for an amount equal to 26% of the value of the asset, and yet ends up yielding an annual interest rate of 300% of the loan amount. While title lending’s disreputable history is undoubtedly something to be aware of when considering the prospect of a title loan, many states now have laws and regulations protecting borrowers through such measures as limitations on loan amounts, rates of interest, rollovers, etc. Virginia has laws in place, for example, requiring that interest rates be capped depending on loan amounts, and prohibiting renewals. Below, we at Online Loans have broken down the assorted information available across the web into a convenient need-to-know to make getting you title loan as simple as possible.

Table of Contents

Rates (%)

In Virginia, interest rates are capped at:

  • 22% on portions for $700 or lower,
  • 18% on portions between $700 – $1400, and
  • 15% on portions for $1400 more higher.

Credit Requirements

To their discredit, title lenders are not usually required to review an applicant’s credit before entering into a loan agreement, since the loan is secured by collateral. This makes title loans dangerously easy to obtain, as all that is typically required is a lien-free vehicle and a government I.D.

Laws

Virginia laws restricting title lending practices are as follows: 6.2-2216. Interest rates must be limited as follows:

  • 22% on portions for $700 or lower,
  • 18% on portions between $700 – $1400, and
  • 15% on portions for $1400 more higher.

6.2-2201 – Title lenders must be licensed. 6.2-2217 – Lenders must provide 10 days notice before repossessing a vehicle, and 15 days notice before selling the vehicle, during which periods the borrower may still pay the remaining balance.

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