Consumer Title Loans

Authored By: Iowa Legal Aid


Before the Iowa Legislature changed the law in 2007, car title loans were a very expensive way to borrow money. Now the law limits the amount of interest that can be charged to a 21% annual percentage rate. This is still an expensive loan. Also, if you don't pay back the loan, you lose your car. It's better to seek credit from lenders who offer lower rates. These loans do not seem to exist here in Iowa anymore but they are available in neighboring states such as Missouri.

Here's how car title loans work:

You give a car title lender the title to your car in return for a cash loan. You keep the car but the loan company keeps the title. If you do not make payments, the company takes the car and sells it. The title company may even keep an extra set of keys to make it easier to repossess the car. The first loan payment can be due just fifteen to thirty days after you get the loan.

If you need a loan, go first to a local bank or credit union. Banks and credit unions can give loans secured by cars at lower interest rates than car title lenders. The Iowa legislature also gave authority to credit unions to make smaller loans to borrowers who may not qualify for a loan from a conventional lender.


Last Review and Update: Jan 09, 2023
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