Georgia Title Pawns: What You Need to Know Before You Owe - Part 2

Considering a Georgia title pawn? If you have bad credit, it can be an easy source for quick cash. However, there are a few things you need to know before you pawn your car.

Repossession Guidelines: Georgia code 44-12-131 (3) states that "unless otherwise agreed, a pawnbroker has upon default the right to take possession of the motor vehicle...without judicial process." This law basically states that if the loan is not paid, the lender can repossess the vehicle. There is no mention of a grace period, or a required number of days the loan must be delinquent. This vaguely written law makes it possible for lenders to repossess the vehicle whenever they feel the loan is in default. This could vary by lender. Some lenders could consider the loan in default the first time a payment is late, missed, or not paid in full. So review your contract before signing anything, and be sure it specifies when the loan is in default.

Maximum Interest Rate: Georgia law 44-12-131 (4)(A) allows the maximum interest rate for a title pawn to be 25% for the first 30 days. If the loan is extended for another 30 days, then it is acceptable to add an additional finance charge of 25% to the current principal and interest owed on the loan. Lenders can do this for a total of 90 days, after which the interest rate per 30 day period must be reduced to 12.5%. When calculated as an annual percentage rate, 25% for a 30 day period becomes 300% APR and 12.5% becomes 150% APR, which is a staggering amount of money to pay in interest.

Lack of Government Oversight: Georgia law allows for title pawns to be issued within the state, despite the fact that most states do not allow these types of financial products. While Georgia regulates the practices of pawn companies, they do not provide direct oversight of them. Problems with these companies are handled through city governments and municipalities, not through the state.

Illegal Lease: A pawn broker cannot issue you a pawn and then lease your vehicle back to you while you're paying off the loan. (Section 44-12-131) If this were to happen, it would mean you would be paying the lender loan payments, as well as lease payments. The fact that this law even has to be created is evidence that this can be a rather shady industry. If you have a pawn company that offers to lease your vehicle back to you while you pay off your loan, then run! This practice is illegal, so avoid them at all costs.

Being fully informed, before you borrow, is the best way to protect yourself and your assets. Title pawns are outlawed in most states for a reason. Though Georgia offers them as a financial solution for people with bad credit, they can, unfortunately, be a means to greater financial troubles.

Avoid a high interest, Georgia title pawn, by getting a consumer loan.