Title loans.

Existing law, the California Finance Lenders Law, provides for the licensure and regulation by the Commissioner of Corporations of those engaged in making consumer loans, as defined, and makes a willful violation of its provisions a misdemeanor. Existing law places a cap on interest rates for consumer loans of less than $2,500. With respect to loans secured by a lien on a motor vehicle, existing law requires a licensee to give at least 15 days' written notice of intent to dispose of a repossessed or surrendered motor vehicle to all persons liable on the loan, as specified. Existing law makes those persons liable for any deficiency after the vehicle is repossessed or surrendered if that notice is given within 60 days of repossession or surrender, except as specified. With respect to title loans, as defined, this bill would require a licensee to give at least 30 days' written notice of intent to dispose of a repossessed or surrendered motor vehicle to all persons liable on the loan and would eliminate the liability of those persons when the borrower defaults and the lender disposes of the surrendered or repossessed motor vehicle. The bill would prohibit a licensee from making a title loan unless the licensee provides certain disclosures to the borrower and underwrites each loan to determine the borrower's ability and willingness to repay the loan, as specified. The bill would also prohibit a licensee from structuring a title loan transaction as if it were a sale-leaseback of the vehicle. The bill would enact other provisions relative to title loans and would make a person who violates these provisions liable for a civil penalty of no more than $10,000 in addition to any other remedies prescribed by law. Because a willful violation of the bill's provisions would be a crime, the bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.