In exchange for the loan, a borrower uses his car title as collateral with a title loan lender. Although title loan practices are legal in many states, some have enacted consumer protection laws governing lending practices of title loan lenders and the steps lenders must take when borrowers default on their loans. Generally, upon default, a lender can repossess his collateral. In Nevada, the Nevada Revised Statutes and Nevada Code govern title lending practices.
Sole Remedy
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Under Nevada law, a title loan lender's sole remedy when a borrower defaults on his loan is to repossess or reclaim his collateral. The lender cannot pursue civil legal liability for repayment unless the borrower conducted fraud or intentionally damages his vehicle to avoid repossession. If there is no fraud, concealment or intentional waste, the lender's exclusive remedy is to pursue repossession.
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Vehicle Fraud and Waste
Title loan lenders can sue borrowers for defaulting on their loans or loan repayment extensions in egregious situations. If a borrower intentionally tried to conceal his vehicle to evade repossession, the lender can sue him for fraud. If a borrower intentionally damaged or neglected his vehicle, the lender can sue her for intentional dissipation or waste. However, the Nevada Code states that it is not considered waste when a borrower continues to drive her vehicle in the same manner before she obtained the loan.
Loan Fraud
Similar to vehicular fraud or waste, a lender can sue a borrower for fraudulently obtaining the loan by providing false information or transferring title to a third party in an effort to avoid repossession. For example, if a borrower transferred title to his brother after he obtained his loan, his title loan lender can sue him for fraud. Lenders can sue borrowers for fraud and collect reasonable attorneys' fees and legal costs. Furthermore, courts may award other equitable remedies, such as damages.
Consumer Rights
Title loan lenders have a legal obligation to post their fees and interest rates in conspicuous places to notify prospective borrowers of the applicable fees. Furthermore, title loan lenders must post their licensing information in conspicuous areas. Generally, title loan lenders cannot charge more than 40 percent of the principal loan amounts as an annual percentage rate. Under Nevada law, title loan lenders are not allowed to make more than one loan to one customer at the same time until the customer pays off any existing loans to that title loan lender. The Nevada Revised Statutes place further prohibitions on title loan lenders who engage in business with military borrowers. If a title loan lender repossesses his collateral, the lender must allow the borrower to reclaim her personal property left in the vehicle.
Considerations
Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.