What is a Wisconsin Title Loan?
A Wisconsin title loan is a loan for the state of Wisconsin where the borrower allows an asset, usually a car, to be used as collateral in case of a default. Title loan amounts are hence based principally on the value of the asset, and typically end up being small (~$1000), short-term (~30 day payment periods) loans with high interest rates (~25% monthly, or a 300% APR). These characteristic have led to predatory trends in title lending. It was found in a February 2018 report by the Center for Responsible Lending and the Consumer Federation of America, for example, that on average title loan borrowers will end up paying $2,142 in interest for a loan of $951. In light of their infamous history, the states in which title lending is still legal have implemented laws that protect borrowers from being taken advantage of financially. For instance, lenders are required by law in many states to ensure that borrowers are well aware of the nature of title loans, i.e., that even irrespective of questionable behavior on the part of a lender, it can be hard to avoid accumulating unruly debt. In addition, many states have limitations on what lenders can charge for interest and other fees. In Wisconsin, for example, title loans cannot be for more than $25,000, and cannot last longer than 6 months. 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.
On the other hand, there is no limit in Wisconsin to how much lenders may charge for interest (prior to maturity date). Title loan interest rates on average are 25% per month, which means if you are looking for a title loan in Wisconsin it would not be unreasonable to expect an APR of 300%. After the maturity date, however, Wisconsin lenders are not permitted to charge interest higher than 2.75%.
Title loans are infamously accessible, being based on collateral rather than the strength of the borrower's financial standing. Credit checks are hence rarely required, so that applicants will need only a lien-free asset and a government-issued I.D.
places the following restrictions on title lending:
- Title loans cannot exceed $25,000.
- Title loans cannot be for an amount greater than 50% of the value of the vehicle.
- Title loans cannot last longer than 6 months.