Title 6.2. Financial Institutions and Services
Subtitle III. Other Regulated Providers of Financial Services
Chapter 22. Motor Vehicle Title Loans
Chapter 22. Motor Vehicle Title Loans.
§ 6.2-2200. Definitions.As used in this chapter, unless the context requires a different meaning:
"Affiliate" means a person related to a licensee by common ownership or control, or any employee or agent of a licensee.
"Annual percentage rate" has the same meaning as in the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time. All fees and charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including interest and the monthly maintenance fees authorized under § 6.2-2216, shall be included in the computation of the annual percentage rate.
"Bond" includes any form of financial instrument that provides security equivalent to that provided by a bond, such as an irrevocable letter of credit, if its use in lieu of a bond is authorized pursuant to regulations adopted by the Commission.
"Interest" means all charges payable directly or indirectly by a borrower to a licensee as a condition to a loan, including fees, service charges, and renewal charges, and any ancillary product sold in connection with a loan, but does not include the monthly maintenance fees, deposit item return fees, late charges, or reasonable costs of repossession and sale authorized under § 6.2-2216.
"Licensee" means a person to whom a license has been issued under this chapter.
"Loan amount" means the principal amount of a loan exclusive of fees or charges.
"Motor vehicle" means an automobile, motorcycle, mobile home, truck, van, or other vehicle operated on public highways and streets.
"Motor vehicle title loan" or "title loan" means a loan secured by a non-purchase money security interest in a motor vehicle.
"Motor vehicle title loan agreement" or "loan agreement" means a written document that sets out the terms and conditions under which a licensee agrees to make a motor vehicle title loan to a borrower, and the borrower agrees to give to the licensee a security interest in a motor vehicle owned by the borrower to secure repayment of the motor vehicle title loan and performance of the other obligations under the loan agreement.
"Person" means any individual, corporation, partnership, association, cooperative, limited liability company, trust, joint venture, or other legal or commercial entity.
"Principal" means any person who, directly or indirectly, owns or controls (i) 10 percent or more of the outstanding stock of a stock corporation or (ii) a 10 percent or greater interest in any other type of entity.
A. Unless exempted from the provisions of this chapter pursuant to § 6.2-2202:
1. No person shall engage in the business of making motor vehicle title loans to residents of the Commonwealth or to any individuals in the Commonwealth, whether or not the person has a location in the Commonwealth, except in accordance with the provisions of this chapter and without having first obtained a license under this chapter from the Commission;
2. No person shall engage in the business of arranging or brokering motor vehicle title loans for residents of the Commonwealth, or any individuals in the Commonwealth, whether or not the person has a location in the Commonwealth; and
3. Any loan made in violation of this section is void, and no person shall have the right to collect, receive, or retain any principal, interest, fees, or other charges in connection with the loan.
B. The provisions of subsection A shall apply to any person who seeks to evade its application by any device, subterfuge, or pretense whatsoever, including:
1. The loan, forbearance, use, or sale of (i) credit, as guarantor, surety, endorser, comaker, or otherwise; (ii) money; (iii) goods; or (iv) things in action;
2. The use of collateral or related sales or purchases of goods or services, or agreements to sell or purchase, whether real or pretended; receiving or charging compensation for goods or services, whether or not sold, delivered, or provided; and
3. The real or pretended negotiation, arrangement, or procurement of a loan through any use or activity of a third person, whether real or fictitious.
2010, c. 477, § 6.1-481; 2011, c. 418; 2020, cc. 1215, 1258.
A. The provisions of this chapter shall not apply to any bank, savings institution, or credit union, or to a person licensed under Chapter 15 (§ 6.2-1500 et seq.), that does not elect to become licensed under this chapter. Electing to become licensed under this chapter, however, shall constitute a waiver of the benefit of any and all laws of the Commonwealth and other states, territories, possessions, and districts of the United States and federal laws preemptive of, or inconsistent with, the provisions of this chapter.
B. The provisions of this chapter shall not apply to extensions of credit for the sole purpose of financing the purchase of a motor vehicle, or of refinancing a purchase money loan, secured by a lien on the motor vehicle.
2010, c. 477, § 6.1-482.
A. An application for a license under this chapter shall be made in writing, under oath, and on a form provided by the Commissioner.
B. The application shall set forth:
1. The name and address of the applicant and (i) if the applicant is a partnership, firm, or association, the name and address of each partner or member; (ii) if the applicant is a corporation or limited liability company, the name and address of each director, member, registered agent, and principal; or (iii) if the applicant is a business trust, the name and address of each trustee and beneficiary;
2. The addresses of the locations of the business to be licensed; and
3. Such other information concerning the financial responsibility, background, experience, and activities of the applicant and its members, officers, directors, and principals as the Commissioner may require.
C. The application shall be accompanied by payment of an application fee of $500, or other reasonable amount that the Commission may prescribe by regulation.
D. The application fee shall not be refundable in any event. The fee shall not be abated by surrender, suspension, or revocation of the license.
The application for a license shall also be accompanied by a bond filed with the Commissioner with corporate surety authorized to execute such bond in the Commonwealth, in the sum of $50,000 per location, or such greater sum as the Commission may require, but not to exceed a total of $500,000. The form of such bond shall be approved by the Commission. Such bond shall be continuously maintained thereafter in full force. Such bond shall be conditioned upon the applicant or licensee performing all written agreements with borrowers or prospective borrowers, correctly and accurately accounting for all funds received by him in his licensed business, and conducting his licensed business in conformity with this chapter and all applicable laws. Any person who may be damaged by noncompliance of the licensee with any condition of such bond may proceed on such bond against the principal or surety thereon, or both, to recover damages. The aggregate liability under the bond shall not exceed the penal sum of the bond.
The Commissioner may make such investigations as he deems necessary to determine if the applicant has complied with all applicable provisions of law and regulations adopted thereunder.
2010, c. 477, § 6.1-485.
A. Upon the filing and investigation of an application for a license, and compliance by the applicant with the provisions of §§ 6.2-2203 and 6.2-2204, the Commission shall issue and deliver to the applicant the license applied for to engage in business under this chapter at the locations specified in the application if it finds:
1. That the financial responsibility, character, reputation, experience, and general fitness of the applicant and its members, senior officers, directors, trustees, and principals are such as to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law; and
2. That the applicant has unencumbered liquid assets per location available for the operation of the business of at least $75,000.
B. If the Commission fails to make such findings, no license shall be issued and the Commissioner shall notify the applicant of the denial and the reasons for such denial.
2010, c. 477, § 6.1-486.
A. Each license shall state the address or addresses at which the business is to be conducted and shall state fully the legal name of the licensee as well as any fictitious name by which the licensee is operating in the Commonwealth. Each license shall be posted prominently in each place of business of the licensee. Licenses shall not be transferable or assignable, by operation of law or otherwise. No licensee shall use any name in the Commonwealth other than the legal name or fictitious name set forth on the license issued by the Commission.
B. No licensee shall open an additional office or relocate any place of business without prior approval of the Commission. Applications for such approval shall be made in writing on a form provided by the Commissioner and shall be accompanied by payment of a $150 nonrefundable application fee or other reasonable amount that the Commission may prescribe by regulation. The application shall be approved unless the Commission finds that the applicant does not have the required liquid assets or has not conducted business under this chapter efficiently, fairly, in the public interest, and in accordance with law. The application shall be deemed approved if notice to the contrary has not been mailed by the Commission to the applicant within 30 days of the date the application is received by the Commission. After approval, the applicant shall give written notice to the Commissioner within 10 days of the commencement of business at the additional location or relocated place of business.
C. Every licensee shall within 10 days notify the Commissioner, in writing, of the closing of any business location and of the name, address, and position of each new senior officer, member, partner, or director and provide such other information with respect to any such change as the Commissioner may reasonably require.
D. Every license shall remain in force until it has been surrendered, revoked, or suspended. The surrender, revocation, or suspension of a license shall not affect any preexisting legal right or obligation of such licensee.
A. Except as provided in this section, no person shall acquire, directly or indirectly, 25 percent or more of the voting shares of a corporation or 25 percent or more of the ownership of any other person licensed to conduct business under this chapter unless such person first:
1. Files an application with the Commission in such form as the Commissioner may prescribe from time to time;
2. Delivers such other information to the Commissioner as the Commissioner may require concerning the financial responsibility, background, experience, and activities of the applicant, its directors, senior officers, principals, and members and of any proposed new directors, senior officers, principals, or members of the licensee; and
3. Pays such application fee as the Commission may prescribe.
B. Upon the filing and investigation of an application, the Commission shall permit the applicant to acquire the interest in the licensee if it finds that the applicant, its members if applicable, its directors, senior officers, trustees, and principals and any proposed new directors, members, senior officers, trustees, and principals have the financial responsibility, character, reputation, experience, and general fitness to warrant belief that the business will be operated efficiently and fairly, in the public interest, and in accordance with law. The Commission shall grant or deny the application within 60 days from the date a completed application accompanied by the required fee is filed unless the period is extended by order of the Commissioner reciting the reasons for the extension. If the application is denied, the Commission shall notify the applicant of the denial and the reasons for the denial.
C. The provisions of this section shall not apply to (i) the acquisition of an interest in a licensee, directly or indirectly, including an acquisition by merger or consolidation by or with a person licensed under this chapter; (ii) the acquisition of an interest in a licensee, directly or indirectly, by merger or consolidation by or with a person affiliated through common ownership with the licensee; or (iii) the acquisition of an interest in a licensee by bequest, descent, survivorship, or operation of law. The person acquiring an interest in a licensee in a transaction that is exempt from filing an application by this subsection shall send written notice to the Commissioner of such acquisition within 30 days of its closing.
2010, c. 477, § 6.1-488.
Every licensee shall maintain in its licensed offices such books, accounts, and records as the Commission may reasonably require in order to determine whether such licensee is complying with the provisions of this chapter and rules and regulations adopted in furtherance thereof. Such books, accounts, and records shall be maintained apart and separate from any other business in which the licensee is involved. Such records relating to title loans shall be retained for at least three years after final payment is made on any title loan.
2010, c. 477, § 6.1-489.
A. Each licensee under this chapter shall annually, on or before March 25, file a written report with the Commissioner containing such information as the Commissioner may require concerning his business and operations during the preceding calendar year as to each licensed place of business. Reports shall be made under oath and shall be in the form prescribed by the Commissioner.
B. The Commissioner shall publish annually and make available to the public an analysis of the information required under this section and other information the Commissioner may choose to include. The published analysis shall include all of the following:
1. The total number of borrowers, loans, defaulted loans, and charged-off loans and the total dollar value of the charged-off loans;
2. The average loan size, average contracted annual percentage rate, average contracted charges per loan, total contracted loan charges, and total loan charges actually paid;
3. The total number of deposit item return fees and the total dollar value of those charges;
4. The total number of licensee business locations and the average number of borrowers per location;
5. The total number of title loan contracts that resulted in repossession or surrender of a vehicle, the total number of title loan contracts that resulted in a borrower redeeming a repossessed or surrendered vehicle, the total number of repossessed or surrendered vehicles that were sold, the total fair market value of repossessed or surrendered vehicles that were sold as stated in the loan contracts, the total amount of proceeds licensees received from the sale of repossessed or surrendered vehicles, the total amount of sale proceeds in excess of the redemption amount paid to borrowers as described in subsection C of § 6.2-2217, the total amount of charges licensees received from borrowers related to the repossession and sale of vehicles, and the percentage of all title loan contracts that resulted in a repossession of a vehicle; and
6. A summary of pending and completed enforcement actions, which shall include lists of suspended or revoked licenses, cease and desist orders, and civil penalties pursuant to this chapter.
Within 15 days following the occurrence of any of the following events, a licensee shall file a written report with the Commission describing such event and its expected impact upon the business of the licensee:
1. The filing of bankruptcy, reorganization, or receivership proceedings by or against the licensee;
2. The institution of administrative or regulatory proceedings against the licensee by any governmental authority;
3. Any felony indictments of the licensee or any of its members, partners, directors, officers, or principals;
4. Any felony conviction of the licensee or any of its members, partners, directors, officers, or principals; and
5. Such other event as the Commission may prescribe by regulation.
2010, c. 477, § 6.1-491.
The Commission may, by its designated officers and employees, as often as it deems necessary, investigate and examine the affairs, business, premises, and records of any person licensed or required to be licensed under this chapter insofar as they pertain to any business for which a license is required by this chapter. Examinations of licensees shall be conducted at least once in each three-year period. In the course of such investigations and examinations, the owners, members, officers, directors, partners, trustees, beneficiaries, and employees of such person being investigated or examined shall, upon demand of the person making such investigation or examination, afford full access to all premises, books, records, and information that the person making such investigation or examination deems necessary. For the foregoing purposes, the person making such investigation or examination shall have authority to administer oaths, examine under oath all the aforementioned persons, and compel the production of papers and objects of all kinds.
2010, c. 477, § 6.1-492.
A. In order to defray the costs of their examination, supervision, and regulation, every licensee under this chapter shall pay an annual fee calculated in accordance with a schedule set by the Commission. The schedule shall bear a reasonable relationship to the business volume of such licensees, the actual costs of their examinations, and other factors relating to their supervision and regulation. All such fees shall be assessed on or before September 15 for every calendar year. All such fees shall be paid by the licensee to the State Treasurer on or before October 15 following each assessment.
B. In addition to the annual fee prescribed in subsection A, when it becomes necessary to examine or investigate the books and records of a licensee under this chapter at a location outside the Commonwealth, the licensee shall be liable for and shall pay to the Commission within 30 days of the presentation of an itemized statement, the actual travel and reasonable living expenses incurred on account of its examination, supervision, and regulation, or shall pay at a reasonable per diem rate approved by the Commission.
2010, c. 477, § 6.1-493.
The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules of Practice and Procedure.
2010, c. 477, § 6.1-494.
Each licensee shall comply with the following requirements and prohibitions:
1. A licensee shall not make a loan that does not comply with § 6.2-2215.1;
2. A licensee shall not charge, collect, or receive, directly or indirectly, credit insurance premiums, charges for any ancillary product sold, charges for disbursing loan proceeds or refunds including check-cashing charges and any other charges for negotiating forms of payment other than cash, charges for brokering or obtaining a loan, or any fees, interest, or charges in connection with a loan, other than fees and charges permitted by § 6.2-2216;
3. A licensee shall not make a loan to a person if that person is obligated upon any loan to a person licensed under Chapter 18 (§ 6.2-1800 et seq.). Prior to making a loan, a licensee shall make a reasonable attempt to verify the prospective borrower's eligibility under this section which shall include reviewing the files of any affiliate that is licensed under Chapter 18. Unless the Commission requires otherwise by administrative rule or policy statement, a licensee may rely on the loan applicant's written representations with respect to the applicant's obligations to lenders that are licensed under Chapter 18 but are not affiliates of the licensee and a licensee is not subject to any administrative penalty or civil liability if such representations are later determined to be inaccurate;
4. Except as provided in § 6.2-2216.2, a licensee shall not refinance, renew, or extend any title loan or make a loan to a person if the loan would cause the person to have more than one title loan from any licensee outstanding at the same time;
5. Before entering into a motor vehicle title loan, a licensee shall provide each borrower with a pamphlet, in a form consistent with regulations adopted by the Commission, explaining in plain language the rights and responsibilities of the borrower and providing a toll-free number at the Commission for assistance with complaints;
6. A licensee shall not cause any person to be obligated to the licensee in any capacity at any time in the principal amount of more than $2,500;
7. A licensee shall not obtain any agreement from the borrower (i) giving the licensee or any third person power of attorney or authority to confess judgment for the borrower; (ii) authorizing the licensee or any third party to bring suit against the borrower in a court outside the Commonwealth; or (iii) waiving the borrower's right to legal recourse or any other right the borrower has under any otherwise applicable provision of state or federal law;
8. A motor vehicle title loan agreement shall not (i) contain a provision by which a person acting on behalf of the licensee is treated as an agent of the borrower in connection with its formation or execution other than for purposes of filing or releasing a lien with the state where the motor vehicle is registered or (ii) be sold or otherwise assigned to any other person who is not also a licensee, and if a loan agreement is sold or assigned to another licensee, the buyer or assignee of the loan agreement shall be subject to the same obligations under this chapter that apply to the selling or assigning licensee. If a motor vehicle title loan or its servicing is sold or assigned, a licensee shall provide to the borrower written notice and the information needed to make future payments no later than 10 days before the borrower's next payment due date;
9. Loan proceeds shall be disbursed (i) in cash, (ii) by the licensee's business check, or (iii) by debit card provided that the borrower will not be directly charged a fee by the licensee in connection with the withdrawal of the funds. No fee shall be charged by the licensee or affiliate for cashing a title loan proceeds check;
10. A licensee shall not (i) accept a check, real or personal property, or any interest in any property other than the title of one motor vehicle owned by the borrower as security for a title loan; (ii) create or accept any remotely created check, as defined in 12 C.F.R. § 229.2(fff), in connection with a loan; (iii) draft funds electronically from a borrower's account without express written authorization from the borrower; (iv) fail to stop attempts to draft funds electronically from a borrower's account upon request from the borrower or his agent; or (v) require or accept from a borrower a set of keys to a motor vehicle that secures a loan. Nothing in this subdivision shall prohibit the conversion of a negotiable instrument into an electronic form for processing through the automated clearing house system. For purposes of this subdivision, "motor vehicle" includes any accessories or accessions to a motor vehicle that are affixed thereto;
11. A licensee shall not attempt to draft funds electronically from a borrower's account after two consecutive attempts have failed, unless the licensee obtains new written authorization from the borrower to transfer or withdraw funds electronically from the borrower's account;
12. A licensee shall not make a motor vehicle title loan if, on the date the loan agreement is signed by the borrower, the motor vehicle's certificate of title evidences that the motor vehicle is security for another loan or otherwise is encumbered by a lien;
13. A licensee shall (i) hold the certificate of title to the motor vehicle throughout the period that the loan agreement is in effect and (ii) within seven days following the date of the motor vehicle title loan agreement, file to have its security interest in the motor vehicle added to its certificate of title by complying with the requirements of § 46.2-637, or in the case of a motor vehicle registered in a state other than the Commonwealth by complying with that state's requirements for perfecting a security interest in a motor vehicle;
14. A licensee shall not knowingly make a title loan to a borrower to enable the borrower to (i) pay for any other product or service sold at the licensee's business location or by an affiliate or (ii) repay any amount owed to the licensee or an affiliate of the licensee in connection with another credit transaction;
15. A licensee shall conspicuously post in each licensed location (i) a schedule of finance charges on a title loan, using as an example a $1,000 loan that is repaid over a 12-month period and (ii) a notice containing the following statement: "Should you wish to file a complaint against us, you may contact the Bureau of Financial Institutions at [insert contact information]." The Commission shall furnish licensees with the appropriate contact information;
16. A licensee or affiliate shall not knowingly make a motor vehicle title loan to a covered member of the armed forces or a dependent of such member. Prior to making a motor vehicle title loan, every licensee or affiliate shall inquire of every prospective borrower if the individual is a covered member of the armed forces or a dependent of a covered member. The prospective borrower shall affirm in writing to the licensee or affiliate if he is not a covered member of the armed forces or a dependent of a covered member. For purposes of this section, "covered member of the armed forces" means a person on active duty under a call or order that does not specify a period of 30 days or less or on active guard and reserve duty. For purposes of this section, "dependent of a covered member of the armed forces" means the member's spouse, the member's child as defined by 38 U.S.C. § 101 (4), or an individual for whom the member provided more than one-half of the individual's support for 180 days immediately preceding the date the motor vehicle title loan is sought;
17. In collecting or attempting to collect a motor vehicle title loan, a licensee shall comply with the restrictions and prohibitions applicable to debt collectors contained in the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) regarding harassment or abuse, false, misleading or deceptive statements or representations, and unfair practices in collections;
18. A licensee shall not contact a borrower for any reason other than (i) for the borrower's benefit regarding upcoming payments, options for obtaining loans, payment options, payment due dates, the effect of default, or, after default, receiving payments or other actions permitted by the licensee; (ii) to advise the borrower of missed payments or dishonored checks; (iii) to advise the borrower regarding a repossessed or surrendered vehicle; or (iv) to assist the transmittal of payments via a third-party mechanism;
19. A licensee shall not make a loan to a borrower that includes an acceleration clause or a demand feature that permits the licensee, in the event the borrower fails to meet the repayment terms for any outstanding balance, to terminate the loan in advance of the original maturity date and to demand repayment of the entire outstanding balance, unless both of the following conditions are met: (i) not earlier than 10 days after the borrower's payment was due, the licensee provides written notice to the borrower of the termination of the loan and (ii) in addition to the outstanding balance, the licensee collects only prorated interest and the fees earned up to the date the loan was terminated or the borrower's vehicle was repossessed or surrendered, whichever is earlier. For purposes of this subsection, the outstanding balance and prorated interest and fees shall be calculated as if the borrower had voluntarily prepaid the loan in full on the date of termination, repossession, or surrender;
20. A licensee shall not recommend to a borrower that the borrower obtain a loan for a dollar amount that is higher than the borrower has requested;
21. A licensee shall not (i) engage in any unfair, misleading, deceptive, or fraudulent acts or practices in the conduct of its business or (ii) threaten, or cause to be instigated, criminal proceedings against a borrower arising from the borrower's failure to pay any sum due under a loan agreement;
22. A licensee shall provide a safe place for the keeping of all certificates of title while they are in its possession;
23. A licensee may require a borrower to purchase or maintain property insurance upon a motor vehicle securing a title loan made pursuant to this chapter. A licensee may not require the borrower to obtain such insurance from a particular provider; and
24. If a licensee or any person acting at its direction takes possession of a motor vehicle securing a title loan, the vehicle and any personal items in it shall be stored in a secure location.
2010, c. 477, § 6.1-495; 2011, c. 418; 2016, c. 501; 2020, cc. 1215, 1258.
A licensee may engage in the business of making motor vehicle title loans provided that each loan meets all of the following conditions:
1. The total amount of the loan does not exceed $2,500.
2. The minimum duration of the loan is six months and the maximum duration of the loan is 24 months; however, the minimum duration of the loan may be less than six months if the total monthly payment on the loan does not exceed the greater of an amount that is (i) five percent of the borrower's verified gross monthly income or (ii) six percent of the borrower's verified net monthly income.
3. The loan is made pursuant to a written loan contract that sets forth the terms and conditions of the loan, which shall be signed by the borrower and a person authorized by the licensee to sign such agreements and dated the same day the loan is made and disbursed. A copy of the signed loan contract shall be provided to the borrower. The loan contract shall disclose in a clear and concise manner all of the following:
a. The principal amount of the loan and the total amount of fees and charges the borrower will be required to pay in connection with the loan pursuant to the loan contract.
b. The amount of each payment of principal and interest, when each payment is due, the total number of payments that the borrower will be required to make under the loan contract, and the loan's maturity date.
c. The make, model, year, and vehicle identification number of the motor vehicle in which a security interest is being given as security for the loan, and the fair market value of the vehicle which value the licensee shall determine by reference to the value for the motor vehicle specified in a recognized pricing guide if the motor vehicle is included in a recognized pricing guide.
d. A statement, printed in a minimum font size of 10 points, that informs the borrower that complaints regarding the loan or lender may be submitted to the Bureau and includes the correct telephone number, website address, and mailing address for the Bureau.
e. Any disclosures required under the federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) and its implementing regulations, as they may be amended from time to time.
f. The annual percentage rate.
g. A statement, printed in a minimum font size of 10 points, as follows: "This loan is made pursuant to Chapter 22 of Title 6.2 of the Code of Virginia. You have the right to rescind or cancel this loan by returning the loan proceeds check or the originally contracted loan amount by 5 p.m. of the third business day immediately following the day you enter into this contract."
h. A statement, printed in a minimum font size of 10 points, as follows: "Electronic payment is optional. You have the right to revoke or remove your authorization for electronic payment at any time."
i. The borrower's mailing address.
j. A statement, printed in at least 14-point bold type immediately above the borrower's signature, as follows:
YOU ARE PLEDGING YOUR MOTOR VEHICLE AS COLLATERAL FOR THIS LOAN. IF YOU FAIL TO REPAY THE LOAN PURSUANT TO THIS AGREEMENT, WE MAY REPOSSESS YOUR MOTOR VEHICLE.
UNLESS YOU CONCEAL OR INTENTIONALLY DAMAGE THE MOTOR VEHICLE, OR OTHERWISE IMPAIR OUR SECURITY INTEREST BY PLEDGING THE MOTOR VEHICLE TO A THIRD PARTY OR PLEDGING A MOTOR VEHICLE TO US THAT IS ALREADY SUBJECT TO AN UNDISCLOSED EXISTING LIEN, YOUR LIABILITY FOR DEFAULTING UNDER THIS LOAN IS LIMITED TO THE LOSS OF THE MOTOR VEHICLE.
IF YOUR MOTOR VEHICLE IS SOLD DUE TO YOUR DEFAULT, YOU ARE ENTITLED TO ANY SURPLUS OBTAINED AT SUCH SALE BEYOND WHAT IS OWED PURSUANT TO THIS AGREEMENT ALONG WITH ANY REASONABLE COSTS OF RECOVERY AND SALE.
k. Such other information relating to the loan as the Commission shall determine, by regulation, is necessary to ensure that the borrower is provided adequate notice of the relevant provisions of the loan.
4. The loan is a precomputed loan and is payable in substantially equal installments consisting of principal, fees, and interest combined. For purposes of this section, "precomputed loan" means a loan in which the debt is a sum comprising the principal amount and the amount of fees and interest computed in advance on the assumption that all scheduled payments will be made when due.
5. The loan may be rescinded or canceled on or before 5 p.m. of the third business day immediately following the day of the loan transaction upon the borrower returning the original loan proceeds check or paying to the licensee, in the form of cash or other good funds instrument, the loan proceeds.
A. A licensee may charge, collect, and receive only the following fees and charges in connection with a motor vehicle title loan, provided such fees and charges are set forth in the written loan contract described in § 6.2-2215.1:
1. Interest at a simple annual rate not to exceed 36 percent;
2. Subject to § 6.2-2216.1, a monthly maintenance fee that does not exceed the lesser of eight percent of the originally contracted loan amount or $15, provided the fee is not added to the loan balance on which interest is charged;
3. Any deposit item return fee incurred by the licensee, not to exceed $25, if a borrower's check or electronic draft is returned because the account on which it was drawn was closed by the borrower or contained insufficient funds, or the borrower stopped payment of the check or electronic draft;
4. Damages and costs to which the licensee may become entitled to by law in connection with any civil action to collect a loan after default, except that the total amount of damages and costs shall not exceed the originally contracted loan amount;
5. Reasonable costs of repossession and sale of the motor vehicle in accordance with § 6.2-2217, provided that the total amount of such costs of repossession and sale that a licensee or any person working on its behalf may charge or receive from the borrower shall be limited to an amount equal to five percent of the originally contracted loan amount; and
6. A late charge in accordance with the provisions of § 6.2-400 provided that the late charge shall not exceed $20.
B. Notwithstanding anything set forth in subsection A, other provisions of this chapter, or in a motor vehicle title loan agreement, interest shall not accrue on the principal balance of a motor vehicle title loan from and after:
1. The date that the motor vehicle securing the title loan is repossessed by or at the direction of the licensee; or
2. Sixty days after the borrower has failed to make a monthly payment on a motor vehicle title loan as required by the loan agreement unless the borrower has not surrendered the motor vehicle and the borrower is concealing the motor vehicle.
C. A licensee shall not be entitled to collect or recover from a borrower any sum otherwise permitted pursuant to § 6.2-302, 8.01-27.2, or 8.01-382. In no event shall the borrower be liable for fees incurred in connection with the storage of a motor vehicle securing a title loan.
D. If any person causes a borrower to pay fees related to repossession or sale of the motor vehicle in excess of the amount allowed under subdivision A 5, or any fee to store the motor vehicle, the borrower shall be entitled to recover such amounts or fees from the licensee upon presenting a valid receipt.
The Commission may, from time to time, by regulation, adjust the dollar amount of $15 specified in subdivision A 2 of § 6.2-2216 to reflect the rate of inflation from the previous date that the dollar amount was established, as measured by the Consumer Price Index or other method of measuring the rate of inflation which the Commission determines is reliable and generally accepted.
Subject to subsection F of § 6.2-2216.3, a licensee may refinance a title loan, provided that the refinanced loan is also a title loan.
A. The licensee shall, upon the request of the borrower or his agent, provide a statement of balance due on a motor vehicle title loan.
B. A borrower shall be permitted to make partial payments, in increments of not less than $5, on the loan at any time prior to maturity, without charge. The licensee shall give the borrower dated receipts for each payment made, which shall state the updated balance due on the loan.
C. When providing a statement of balance due on the loan, the licensee shall state the amount required to discharge the borrower's obligation in full as of the date the notice is provided and for each of the next three business days following that date. If the licensee cannot reasonably supply a firm statement of balance due when requested or required, the licensee may provide a good faith estimate of the balance due immediately and provide to the borrower or his agent a firm statement of balance due within two business days.
D. The licensee shall provide any statement of balance due verbally and in writing, and shall not fail to provide the information by phone upon the request of the borrower or his agent.
E. A licensee shall not fail to accept cash or other good funds instrument from the borrower, or a third party when submitted on behalf of the borrower, for repayment of a title loan in full or in part. Payments shall be credited by the licensee on the date received.
F. Notwithstanding any other provision of law, if a title loan is prepaid in full or refinanced prior to the loan's maturity date, the licensee shall refund to the borrower a prorated portion of loan charges based on a ratio of the number of days the loan was outstanding and the number of days for which the loan was originally contracted. For purposes of this section, all charges made in connection with the loan shall be included when calculating the loan charges except for deposit item return fees, late charges, and reasonable costs of repossession and sale authorized under § 6.2-2216.
G. The licensee shall provide any refund due to a borrower in the form of cash or business check as soon as reasonably possible and not later than two business days after receiving payment from the borrower.
H. Upon repayment of the loan in full, the licensee shall (i) mark the original loan agreement with the word "paid" or "canceled," return it to the borrower, and retain a copy in its records and (ii) promptly release any security interest in a motor vehicle.
I. When releasing a security interest in a motor vehicle, a licensee shall (i) take any action necessary to reflect the termination of its lien on the motor vehicle's certificate of title and (ii) promptly return the certificate of title to the borrower.
Notwithstanding any provision of this chapter to the contrary, a licensee shall not contract for, charge, collect, or receive in connection with a motor vehicle title loan a total amount of fees and charges that exceeds either (i) 50 percent of the originally contracted loan amount, if the originally contracted loan amount was $1,500 or less, or (ii) 60 percent of the originally contracted loan amount, if the originally contracted loan amount was greater than $1,500. For purposes of this section, all charges made in connection with the loan shall be included when calculating the total loan charges except for deposit item return fees, late charges, and reasonable costs of repossession and sale authorized under § 6.2-2216.
Before initiating a motor vehicle title loan transaction with a borrower, a licensee shall make a reasonable attempt to verify the borrower's income. At a minimum, the licensee shall obtain from the borrower one or more recent pay stubs or other written evidence of recurring income, such as a bank statement. The written evidence shall include at least one document that, when presented to the licensee, is dated not earlier than 45 days prior to the borrower's initiation of the title loan transaction.
A. Except as otherwise provided in subsection E, a licensee taking a security interest in a motor vehicle pursuant to this chapter shall be limited, upon default by the borrower, to seeking repossession of, preparing for sale, and selling the motor vehicle in accordance with Title 8.9A. Unless (i) the licensee, at least 10 days prior to repossessing the motor vehicle securing a title loan, has sent to the borrower, by first class mail, written notice advising the borrower that his title loan is in default and stating that the motor vehicle may be repossessed unless the principal and interest owed under the loan agreement are paid and (ii) the borrower does not pay such principal and interest prior to the date the motor vehicle is repossessed by or at the direction of the licensee, then the licensee shall not collect or charge the costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216. A licensee shall not repossess a motor vehicle securing a title loan prior to the date specified in the notice. Except as otherwise provided in subsection E, a licensee shall not seek or obtain a personal money judgment against a borrower for any amount owed under a loan agreement or any deficiency resulting after the sale of a motor vehicle.
B. At least 15 days prior to the sale of a motor vehicle, a licensee shall (i) notify the borrower of the date and time after which the motor vehicle is subject to sale and (ii) provide the borrower with a written accounting of the redemption amount, which shall be the sum of the principal amount due to the licensee, interest accrued through the date the licensee took possession of the motor vehicle, and any reasonable expenses incurred to date by the licensee in taking possession of, preparing for sale, and selling the motor vehicle. At any time prior to such sale, the licensee shall permit the borrower to redeem the motor vehicle by tendering cash or other good funds instrument for the principal amount due to the licensee, interest accrued through the date the licensee took possession, and any allowable fees or costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216. Borrowers shall be permitted to recover personal items from repossessed motor vehicles promptly and at no cost.
C. Within 10 days of the licensee's receipt of funds from the sale of a motor vehicle, the borrower is entitled to receive all proceeds from such sale of the motor vehicle in excess of the redemption amount included in the notice described in subsection B, less any additional allowable fees or costs of repossessing and selling the motor vehicle described in subdivision A 5 of § 6.2-2216 that were not included in the redemption amount.
D. Except in the case of fraud or a voluntary surrender of the motor vehicle, a licensee shall not take possession of a motor vehicle until such time as a borrower is in default under the loan agreement. Except as otherwise provided in this chapter, the repossession and sale of a motor vehicle shall be subject to the provisions of Title 8.9A.
E. Notwithstanding any provision to the contrary, but subject to § 6.2-2216, upon default by a borrower, a licensee may seek a personal money judgment against the borrower for any amounts owed under a loan agreement if the borrower impairs the licensee's security interest by (i) intentionally damaging or destroying the motor vehicle, (ii) intentionally concealing the motor vehicle, (iii) giving the licensee a lien in a motor vehicle that is already encumbered by an undisclosed prior lien, or (iv) subsequently giving a security interest in, or selling, a motor vehicle that secures a title loan to a third party, without the licensee's written consent.
A. No person licensed or required to be licensed under this chapter shall use or cause to be published any advertisement that (i) contains any false, misleading, or deceptive statement or representation or (ii) identifies the person by any name other than the name set forth on the license issued by the Commission.
B. Any advertising materials used to promote the price, cost, or interest rate of motor vehicle title loans shall disclose the amount of any minimum monthly payments and a statement of finance charges, expressed as an annual percentage rate, payable using as an example a $1,000 loan that is repaid over a 12-month period. In any print media advertisement, including any web page, used to promote motor vehicle title loans, the disclosure shall be conspicuous. "Conspicuous" shall have the meaning set forth in subdivision (a) (14) of § 59.1-501.2. If a single advertisement consists of multiple pages, folds, or faces, the disclosure requirement applies only to one page, fold, or face. In a television advertisement used to promote motor vehicle title loans, the visual disclosure legend shall include 20 scan lines in size. In a radio advertisement or advertisement communicated by telephone used to promote motor vehicle title loans, the disclosure statement shall last at least two seconds and the statement shall be spoken so that its contents may be easily understood.
2010, c. 477, § 6.1-498.
A licensee shall not conduct the business of making motor vehicle title loans under this chapter at any office, suite, room, or place of business where any other business is solicited or conducted except a registered check cashing business, a short-term loan business licensed under Chapter 18 (§ 6.2-1800 et seq.), or such other business as the Commission determines should be permitted, and subject to such conditions as the Commission deems necessary and in the public interest. No such other business shall be allowed except as permitted by Commission regulation or upon the filing of a written application with the Commission, payment of a $300 fee, or other reasonable amount that the Commissioner may set, and provision of such information as the Commission may deem pertinent. The Commission shall not, however, permit the sale of insurance or the enrolling of borrowers under group insurance policies. This section shall not apply to any other business that is transacted solely with persons residing outside the Commonwealth.
A. The Commission may suspend or revoke any license issued under this chapter upon any of the following grounds:
1. Any ground for denial of a license under this chapter;
2. Any violation of the provisions of this chapter or regulations adopted by the Commission pursuant thereto, or a violation of any other law or regulation applicable to the conduct of the licensee's business;
3. A course of conduct consisting of the failure to perform written agreements with borrowers;
4. Conviction of a felony or misdemeanor involving fraud, misrepresentation, or deceit;
5. Entry of a judgment against the licensee involving fraud, misrepresentation, or deceit;
6. Entry of a federal or state administrative order against the licensee for violation of any law or any regulation applicable to the conduct of his business;
7. Refusal to permit an investigation or examination by the Commission;
8. Failure to pay any fee or assessment imposed by this chapter; or
9. Failure to comply with any order of the Commission.
B. For the purposes of this section, acts of any officer, director, member, partner, trustee, beneficiary, or principal shall be deemed acts of the licensee.
2010, c. 477, § 6.1-499.
If the Commission determines that any person has violated any provision of this chapter or any regulation adopted by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not issue a cease and desist order except based upon findings made at such hearing. Such hearing shall be conducted in accordance with the Commission's Rules of Practice and Procedure. The Commission may enforce compliance with any order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.
2010, c. 477, § 6.1-500.
The Commission shall not revoke or suspend the license of any person licensed under this chapter upon any of the grounds set forth in § 6.2-2219 until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of the licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the Clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not suspend or revoke the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules of Practice and Procedure.
2010, c. 477, § 6.1-501.
In addition to the authority conferred under §§ 6.2-2219 and 6.2-2220, the Commission may impose a fine or penalty not exceeding $1,000 upon any person who it determines, in proceedings commenced in accordance with the Commission's Rules of Practice and Procedure, has violated any of the provisions of this chapter or regulations promulgated by the Commission pursuant thereto, or violated any other law or regulation applicable to the conduct of a licensee's business. For the purposes of this section, each separate violation shall be subject to the fine or penalty herein prescribed and, in the case of a violation of § 6.2-2201, each loan made or arranged shall constitute a separate violation.
2010, c. 477, § 6.1-502.
Any person violating § 6.2-2201 shall, upon conviction, be guilty of a Class 1 misdemeanor. For the purposes of this section, each violation shall constitute a separate offense.
2010, c. 477, § 6.1-503.
A. If any provision of a motor vehicle title loan agreement violates a requirement of this chapter, such provision shall be unenforceable against the borrower.
B. Any person who suffers loss by reason of a violation of any provision of this chapter may bring a civil action to enforce such provision. Any person who is successful in such action shall recover reasonable attorney fees, expert witness fees, and court costs incurred by bringing such action.
The provisions of this chapter, including specifically the licensure requirements of § 6.2-2201, shall apply to persons making motor vehicle title loans over the Internet to Virginia residents or any individuals in Virginia, whether or not the person making the loan maintains a physical presence in the Commonwealth.
A. If the Commission determines that a person is in violation of, or has violated, any provision of this chapter, the Commission may refer the information to the Attorney General and may request that the Attorney General investigate such violations. With or without such referral, the Attorney General is hereby authorized to seek to enjoin violations of this chapter. The circuit court having jurisdiction may enjoin such violations notwithstanding the existence of an adequate remedy at law.
B. The Attorney General may also seek, and the circuit court may order or decree, damages and such other relief allowed by law, including restitution to the extent available to borrowers under applicable law. Persons entitled to any relief as authorized by this section shall be identified by order of the court within 180 days from the date of the order permanently enjoining the unlawful act or practice.
C. In any action brought by the Attorney General by virtue of the authority granted in this section, the Attorney General shall be entitled to seek reasonable attorney fees and costs.
Any violation of the provisions of this chapter shall constitute a prohibited practice in accordance with § 59.1-200 and shall be subject to any and all of the enforcement provisions of the Virginia Consumer Protection Act (§ 59.1-196 et seq.).
2010, c. 477, § 6.1-507.
