District of Columbia loan laws

Nowadays, it is really tough for people to make their monthly payments. Life is getting more expensive and with that, the bills get higher. Whether you have a steady source of income or not, taking care of all expenses may still be a pretty hard task. And, of course, there is always the possibility for an emergency that emerges unexpectedly and so you will need to deal with that too.

Many times, the money you have is simply not enough

Many times, the money you have is simply not enough

Many times, the money you have is simply not enough. Which is why many people use the services of the loan lending industry. While taking out financial assistance from friends and family is a viable option for some, to others, the only way to deal with such tricky financial situations is by taking out a loan. There is a big variety of loans and with plenty of options for borrowers to choose from, it can become quite hard to find the type of loan that best suits your needs.

With that being said, however, there is a certain loan type that is commonly used by the majority of borrowers in the US and that is the payday loans. However, each state in the United States has its own loan law regulations governing the loan lending business. Even though payday loans are probably the most popular type of loans out there, they are not available to customers in every state.

This is mainly due to their extremely high interest rates and fees, which sometimes make them quite dangerous for the people who use them. Below, we will look at what the loan law regulations in the District of Columbia are, and are payday loans available to the residents of this state.

Are payday loans legal in the District of Columbia?

District of Columbia payday loan laws

District of Columbia payday loan laws

Mainly due to their extremely high interest rates and fees, payday loans in the District of Columbia are considered illegal by the Amended District of Columbia Code that governs the functionality of all small loan lenders in the District of Columbia. If a borrower takes out a small loan in the District of Columbia, an AOR cap ensures that the borrower will not have to pay more than 24% interest. This percentage is significantly lower compared to the annual percentage rates that most payday loans across the country have. Because of that, payday loan lending companies do not want to conduct their business in this state. You must not forget that if you want to apply for any type of line of credit or a loan, it is extremely important that you read all the terms and conditions of your loan contract carefully before signing it. You should also be absolutely sure that you are able to repay the loan you are about to take. Otherwise, you would end up owing a lot more than you have taken. And while payday loans are not available to borrowers in the District of Columbia, there are still some alternatives for the residents of the state to choose from.

Installment loans

Installment loans

Installment loans

With installment loans, the borrower is required to repay the money with a set payment (installment) at the end of each month over a scheduled period of time. There are loan lending companies that offer such loans even to borrowers that do not have a perfect credit score, as long as they are able to show proof of a stable monthly income that will allow them to repay their installment loan on time. Much like with payday loans, installment loans have rather high interest rates and so they can also be quite dangerous if not handled right.

Personal loans

In order to be approved for a personal loan from a traditional loan lending institution like a bank, or another reliable loan lender, you would need to have a pretty good credit score. If, however, your credit score is not that good, you may still have some other options available to you. Personal loans have lower interest rates than payday loans and installment loans and their repayment plans can be quite flexible as well.

Other payday loan alternatives in the District of Columbia

Even though payday loan lending is not legal in the District of Columbia, there are still some options that borrowers who are in need of financial assistance can choose from:


Credit cards

Credit cards

Regardless of your credit score state, there are numerous credit card providers who can get you what you need. Compared to payday loans, credit cards have lower interest rates and more reasonable payments.


With car title loans, you use the title of your vehicle as collateral to get a certain amount of money. If you fail to repay your loan, the loan lender can repossess your vehicle. So you need to be completely sure that you can make your payments, otherwise, you will be putting your car at risk.


Tribal loans

Tribal loans

Even if you are a resident of the District of Columbia where payday loan lending is not legal, you may still be able to get a payday loan by using the services of a tribal lender. Because such loan lenders are based on tribal land, they are able to operate by their own laws.


If you are currently living in the District of Columbia but  are a resident of another state where payday loan lending is considered legal, you can apply for a payday loan online. In order to do this, you will need to provide certain documentation proving that you are actually a resident of another state. You also better make sure that the online lender you choose to work with is backed by the OLA.


If taking out a loan is not a viable option for you, you can always try to find a second job to manage your monthly expenses.

How do car title loans work?

You know that time you have a mortgage loan that is due, maybe you have your kid’s school fees that need to be settled or basically any other kind of emergency that needs settling but you are broke. It gets to the point that you need to look at borrowing alternatives for a way out. There are many types of loans these days.

You could get a traditional loan, but it poses a challenge. As much as you want to get a bank loan, you realize that it’s really hard if you have a bad credit score. Thus, you have to look for other borrowing alternatives. One of them is a online car title loan which is also known as an auto title loan. This article will tell you how it works.

  • Car title loan application
Car title loans are easy to apply

Car title loans are easy to apply

Car title loans or auto title loans are small loan amounts that you can get if you use your car as the collateral. Typically, they are referred to as secure loans because if the borrower is unable to repay the loan, the car will be sold so that the lender can recover his money. They are short loans with loan tenures typically from 30 days to maybe a couple of years.

It is very easy to apply for a car title loan. The first thing you do is apply with the lending company of your choice, assuming that you have done your homework and know which company is able to help you.

There are two ways of application – physical application and online application. You may apply by dropping off the application form at the lending company’s office or online. You are a required to have a couple of documents for making the application process to be simple and easy. They include your name, age, home address, proof of work and other details.

For online application, you are required to visit the website of your lending company. Fill out your details according to the online form and then submit it.

Whether you do a physical application or an online one, the documents which you will need to include the car title and its photo identification. The company will also need to see the car that you are using as collateral to verify its condition and market value to determine the maximum amount of money you could get a loan. The company will also ask for a copy of the car keys and also ask you to buy a roadside plan.

The loan is then processed. If you qualify for the car title loan, the company will then write you a check or directly deposit the loan amount into your bank account.

  • Cost of a car title loan

The cost of the loan varies. Basically, the loan can be between 35%-45% of the market value of the car. Thus, it’s all about what kind of car you have used as collateral. The loan is for about 30 days. However, depending on your contract, you could have a longer period for repayment.

When applying, you are required to first pay up all the processing fees and then after 30 days, you start paying your interest and other fees that may be added on top of the car title loan.

  • Interest rates
Interest rates on car title loans

Interest rates on car title loans

The interest rates on car title loans are some of the highest compared to other kinds of loans. The loans are typically small, ranging from $150- $1500, but they could also go up to $5000. It all depends on your car.

Looking at the annual percentage rates (APR) of the loan, you will realize that it’s one of the highest among all loans. Typically, traditional loans have about 7% APR while APRs of credit card loans are around 20%. The APR for a car title loan is about 300%. This means that you will need to pay up to 300% of the amount of money you actually borrowed.

Mathematically, an APR of 300% translates to about 25% interest rates per month. It should also be noted that this is the basic number, which is averagely given as a statistic. In a real sense, the interest rates are customized according to the agreement between the borrower and lender. Thus, there is a sense of flexibility in car title loans.

  • Repayment

There are 3 main ways of repayment: physical, online payment and withdrawal from the borrower’s deposit account.

  • Physical repayment

This means that the borrower makes his way to the lending company and makes a repayment himself. This is a common and convenient method, especially if you live close to the company.

  • Online repayment

This mode of repayment is easy, convenient and flexible. This lets you make online repayments on your phone from anywhere.

  • Deposit accounts withdrawal
Deposit accounts withdrawal

Deposit accounts withdrawal

This method is usually used by people who have a large sum of money to be repaid each month. This involves the lending company withdraws a certain amount of money from your deposit account. This is done with your approval and your bank. According to most state legislations, the lending company is not allowed to make more than two withdrawals consecutively.

  • Rollover

Rollovers happen when you are unable to repay the loan back on time. A rollover lets you extend the repayment period by 30 days. This, however, comes at a price. You will have to pay a penalty fee and a couple of other fees for processing the loan rollover. The lender may also decide to review the loan’s interest rates at this point and may increase them.

Rollovers have a flip side. This means you will have to pay a lot more. This may be challenging since you resorted to borrowing due to a difficult financial situation in the first place. This leads a debt trap should you roll over again and again.

  • Repossession of car
Repossession of car

Repossession of car

Remember when applying for the loan, the lending company asks for an extra set of your car and a roadside plan? Typically the lender decides to repossess your car because you are unable to repay the loan. The repossession process, however, doesn’t start immediately. The lender will give you a couple of payment options and several ways out before eventually deciding to take a repossession action.

During repossession, the lender will sell your car to recover his money. At this point, you lose your automobile. The excess money left after debt settlement could be given back to you or the lender could decide to keep all of it. Essentially, this depends on where you are from and the state legislation.

If you are able to make prompt repayments on your car title loan, you will get to keep your car.

Benefits of car title loans

Benefits of car title loans

If you are employed, maybe you are on a day job, at a specific date that is far away from your payday, the financial struggles in your life are at their best at this time. By saying so, it means that if you meet with an emergency, it becomes a pain to try and solve it.

Emergencies could range from repayments of mortgage loans, school fees for your kids to unexpected situations like illness and accidents. All these require money to settle. It’s never that easy to cope, especially if the only source of income you have is what you get at the end of the month.

Car title loans have emerged as a great alternative to help you get out of tricky financial situations. It’s all about getting yourself a lifeline before you receive your salary by the month-end payday.

According to statistics, car title loans are becoming popular among people these days.

A car title loan requires you to use your car as collateral. Loan amounts can range from between $150- $1500 but it could be as high as $5000. The loan amount is determined by the value of the car that you are using as collateral. The loan amount is about 45% of the car’s market worth at the time of loan application.

Loan application

car title loans benefits

car title loans benefits

You can approach the lending company either by physically making your way to the office or apply online. After the application is submitted, you should submit your car title and its photo identification.

The company also asks for a copy of the car keys and then asks you to buy a roadside plan. After processing your loan, the company gives you the loan amount in the form of a check or deposit the money into your deposit account.

The company expects you to pay back the money as stipulated by the contract that you sign upon getting the loan. It includes the interest and other fees. If you cannot repay the loan, the company may end up repossessing your car and selling it to recover the outstanding loan.

A car title loan, however, has many advantages. That is why it is very popular among people.

1.  Ability to provide cash

A car title loan is designed to help you in times of financial difficulties. It offers cash conveniently and quickly just when you need it.

The loan helps you get out of financially difficult situations by providing cash to solve the problem at hand. We are talking about solving all the emergencies that may happen at a time when your next payday is still a few weeks away.

2.  Getting your money fast

Getting your money fast

Getting your money fast

The application and approval of a car title loan take a very short time. In fact, you could be getting your loan in a matter of a day or two. Compared to other types of loans, this is quite fast. It does not require you to keep making applications and waiting in line at the banks.

After you are approved for a car title loan, your car is then inspected and its value is determined. The lender and you will discuss before the former lays down the terms and conditions for the car title loan.

The speed of the car title loan processing and approval is a result of the simplicity of the loan and how it is designed.

3. Minimal requirements

For your loan to be processed, you will need to actually own a car. There are no bank account or credit checks. The car which you will be using as collateral for the car title loan is what matters.

Therefore, it is easy to process the loan and get the money that you need in less than two days. The credentials needed include basic personal information, the car title, the car itself during the application for assessing its value and its photo identification. Within a day or two, the loan is processed and you are on your way to solving your emergency.

Other loans require a lot of credentials and background checks before they approve the loan. This takes a lot of time. This is why most people are turning to car title loans for quick cash solutions.

4. Use the car as usual

Use the car as usual

Use the car as usual

A car title loan is very different from going to the pawnshop. This is because it allows you to continue using the car which you had used as collateral as you normally do.

The only thing the car title lending company needs is the car title. You are required to do is keep making prompt payments for the car title loan to avoid repossession of the vehicle.    

If you go to pawnshops, they will require the car or automobile to be left in their care until the loan has been repaid in full. It is only then that you will get your car back.

5. Credit scores

As stated earlier, the only documents and credentials needed are just your personal details, the car title and the car and its photo identifications. It is important to understand that a car title loan uses the car as collateral.

Essentially the car is the loan’s source of security. For this reason, the lenders barely look at the credit score of the borrower. The only thing they need is the car title.

Looking at traditional loans and other types of loans, the credit scores of the borrower are very important for the loan to be approved. Hence, car title loan are very suitable as most people as long as they own a car.

6.  Cheaper than cash advances

Car title loans are way cheaper

Car title loans are way cheaper

Car title loans are way cheaper than cash advances. The annual percentage rate (the real cost of borrowing) of cash advances are at about 400% or 450% compared to 300% annual percentage rate of car title loans.

While interest rates for both types of loans are quite high, interest rates for car title loans are definitely lower than those of cash advances.

As a borrower, you want a loan which with a low-interest rate.Hence, most people are attracted to car title loans.

7. Convenient repayment options

Car title loans offer a variety of loan repayment options. They include physical over-the-counter payment and online payment, among others. Compared to other types of loan servicing, this is flexible and efficient. You can make payment from anywhere at any time of your choice. This makes a car title loan very attractive.

8. No stress

A car title loans relieve you from financial stress. Emergencies are easily solved since the loan is approved. Moreover, you don’t need to stress about your credit score.

Car title loans

There are times in life when you need extra cash urgently. With the current economic situation, finances can be tight for some people. It’s quite understandable that you will be looking for a way to get a quick loan. The problem comes when a bank rejects your loan application as you have a bad credit. This is where the car title loan can be a great borrowing option for you.

An online car title loan is a loan that you can get in exchange for using your vehicle as collateral. Technically, the collateral doesn’t always have to be a car. It could range from trucks to motorcycles or any other kind of automobile. The loan is a short-term one with repayment in usually 30 days. The loans have earned themselves a lot of popularity due to their simplicity and efficiency.

  • How a car title loan works

This loan is just all about using your car as collateral. You don’t need a good credit score to qualify. All you need to do is have your credentials checked and verified, then present your car title along with a copy of your car keys.

How a car title loan works?

How a car title loan works?

If the car title loan is granted, you are required to start repaying back the loan at the stipulated time, usually after 30 days. However, the loan tenure could be longer, depending on the agreement you have with the lender.

If you pay up on time, you get your car back. However, if you may have trouble paying up the loan, this will mean that the lender may let you roll over the outstanding loan amount. If he doesn’t, your car will be repossessed and sold for the lender to recover his money. This is rare as the lender will usually give you a couple of options before the car repossession.

  • How to apply

Car title loans are as simple as other collateral loans. Basically, you go to the lending company to apply for the loan, or you can do it online. You will need to fill out some details, such as personal details and the amount of money you want to borrow. The company will then review your application and verify your details. Your car, which you are using as collateral, will be inspected and verified. This is to determine the market value of the car to determine the maximum amount of money you can borrow using your car.

The company will require you to sign a contract before the loan amount is handed to you. The loan is mostly given to you in a check or deposited into your bank account. The whole process will take a maximum of 2 or 3 days.

Many people ask if they could apply for the loan even if the car is not fully paid for. That is not an issue. If you have enough “ownership” or a percentage stake on the car, you could get the loan. You only need to show how much of the car you own for you to qualify for the loan. 

  • Interest rates

car title loan interest rate

car title loan interest rate

If your loan tenure is two years, you can easily calculate the loan’s annual percentage rate. Compared to other types of loans, a car title loan has a high annual percentage rate. However, it’s a small price to pay for the convenience. Usually, the annual percentage rate of car title loans is between 300%-350%. This means that the monthly interest rates fall at around 25% of the total cash borrowed.

  • Repayment

The loan can be serviced in different ways. The first option is to physically make the repayment by visiting the company’s office. This is the most common mode of payment.

However, times are changing now and most people are adopting the new forms of payment like online payment. With this, you can directly make the loan payment from your mobile phone. This is a new and convenient mode of repayment and is very popular among borrowers.

Some people prefer another repayment mode. This involves the lending company actually getting money from your deposit account every month. However, this is done with the approval of the borrower and his bank. The company is usually not allowed to do more than one withdrawal from the deposit account.

  • Roll over

reviewing the loan

reviewing the loan

Times could get tough. You may not be able to repay the loan on time. The lender has the choice of reviewing the loan. This means that the lender will include new terms on the outstanding amount. Interest rates may also be changed. It also has additional fees for processing the loan again, plus the penalty fee for not repaying the loan on time.

Roll over is a second chance for you to repay the outstanding debt. This allows you to escape the painful loss of your automobile. The rollover can be done more than 2 times, depending on how you negotiate with the lender. However, the problem here is that the loan keeps growing, and you may end up in a debt trap in the end.

  • Repossession

This is the inevitable fate of any borrower who is unable to repay his debt. The lender will get your car and sell it to recover his money which you couldn’t pay up. However, car repossession does not happen immediately once you miss one repayment. The lender will give you a couple of more options to repay before ultimately deciding to go with the repossession option.

Depending on which state you live in, the lender may give you the remaining cash after selling your car. Or he may keep all the money after the sale of your car. It  depends on the legislation of the state that you are in.

Car title loans are an easy way to get money. However, they are also very risky since it’s putting your car on the line. You could lose it.