What a title loan costs — before Alabama’s rules
A title loan is usually a single-payment loan due in 15–30 days at around 25% per month — roughly 300% APR — secured by your vehicle. The defining risk is not the rate but the collateral: miss a payment and the lender can repossess the car, and research finds about one in five borrowers eventually loses the vehicle. Where a state caps rates low, single-payment title lending is not offered and a loan above the cap is generally void.
The law in Alabama
- Rate cap
- Up to 25% of principal per month (about 300% APR) as a pawnshop charge in lieu of interest (Ala. Code § 5-19A-7).
- Key law
- Alabama Pawnshop Act, Ala. Code Title 5, Chapter 19A (§ 5-19A-1 et seq.).
- Enforcement
- Licensed by the Alabama State Banking Department, Bureau of Loans. In Floyd v. Title Exchange and Pawn of Anniston, Inc. (1993), the Alabama Supreme Court held an auto title is pawnable while the owner keeps the car, cementing the industry.
Ala. Code § 5-19A-7 caps the pawnshop charge at 25% of principal per month (roughly 300% APR); upheld for title pawns in Floyd v. Title Exchange and Pawn of Anniston, Inc., 620 So.2d 576 (Ala. 1993).
What it means for a Alabama borrower
Title pawns are fully legal in Alabama and among the most expensive in the nation. A lender can charge 25% of what you borrow every month (about 300% a year), and if you miss the 30-day redemption you can lose the vehicle. Treat these as a last resort.
Before you borrow in Alabama
- Check whether the lender is licensed in Alabama — many high-cost online lenders are not.
- Revoke ACH authorization in writing to stop automatic withdrawals from your account.
- File a complaint with the Alabama attorney general and the CFPB.
- Ask whether the balance is even collectable under Alabama law before you pay a collector.
Cheaper first — try these before a title loan in Alabama
Title Loans and tribal lenders in Alabama
Many online lenders that market title loans to Alabama residents are tribal lenders arguing their sovereignty places them outside state rate caps — a separate legal question this site tracks in depth. For which tribal brands lend to Alabama residents and how state law applies to them, see the Alabama tribal-lending page.
Tribal loans in Alabama →Frequently asked questions
Are title loans legal in Alabama?
In Alabama, single-payment auto title loans are legal and enforceable, commonly around 300% APR, with the car as collateral. The speed is real; so is the repossession risk. Check the total cost and never pledge the car you rely on to get to work.
What is the maximum title loan rate in Alabama?
Up to 25% of principal per month (about 300% APR) as a pawnshop charge in lieu of interest (Ala. Code § 5-19A-7).
What can I do about a title loan I already have in Alabama?
Alabama allows this lending, so the loan is generally enforceable — but you can still revoke ACH authorization in writing, avoid taking a second loan to cover the first, and file a complaint with the Alabama attorney general or the CFPB if the lender breaks the rules.