Title Loan vs Installment Loan

Home/Financial Advice/Title Loan vs Installment Loan

Title Loan vs Installment Loan

We hope to explain the difference between a Title Loan per Idaho Code and an installment loan.

Title Loans:
Per Idaho Code: Title loan means a loan for a consumer purpose that is secured by a nonpurchase money security interest in titled personal property and that is scheduled to be repaid in either a single installment or in multiple installments that are not fully amortized.

In other words, a title loan is a loan that is interest only, or has to be paid back all at once. Idaho law specifies a number of things about how to treat title loans. For example, a lender can only charge interest only for two 30-day periods. On the 3rd payment the borrower must pay down 10% of principal. This is good because it forces the loan to be paid off within a year, however, it is sometimes difficult for consumers because the minimum they must pay each month can change from one month to the next.

(You can see the law relating to title loans in Idaho code 28-46 part 5)

By | 2017-04-18T17:25:55+00:00 September 22nd, 2014|Financial Advice|0 Comments