138.16 Title loans.

(1) Definitions. In this section:

(a) “Division" means the division of banking attached to the department of financial institutions.

(b) “Licensed lender" means a person licensed under s. 138.09.

(bm) “Licensed location" means the location specified in a license issued under s. 138.09 (1m) (a).

(c) “Title loan" means a loan of $25,000 or less to a borrower, who obtains or seeks to obtain the loan for personal, family, or household purposes, that is, or is to be, secured by an interest, other than a purchase money security interest, in the borrower's motor vehicle, and that has an original term of not more than 6 months.

(1m) Certificate of authorization.

(a) Before a licensed lender may make title loans under this section, the licensed lender shall first obtain from the division, for each licensed location at which any title loan is to be made, a certificate authorizing the licensed lender to make title loans from that location.

(b) At the time of making an application for a certificate under par. (a), an applicant shall pay to the division an initial annual fee of $5,000. The valid period for the certificate shall be a calendar year and each certificate shall expire on the last day of the calendar year. To renew a certificate, the certificate holder shall, on or before December 10 of the year in which the certificate is to expire, pay to the division an annual renewal fee of $5,000 for the following calendar year.

(2) Loan principal and interest.

(a) No licensed lender may make a title loan to a borrower that results in the borrower having liability for the loan, in principal, of more than 50 percent of the retail value of the motor vehicle used as security for the loan. The division shall promulgate rules for determining the retail value of a motor vehicle for purposes of this paragraph, including rules specifying nationally recognized pricing guides that may be used for determining retail value at the time of loan origination.

(b)

1. This section imposes no limit on the interest that a licensed lender may charge before the maturity date of a title loan.

2. If a title loan is not paid in full on or before the maturity date, a licensed lender may charge, after the maturity date, interest at a rate not exceeding 2.75 percent per month. Interest earned under this subdivision shall be calculated at the rate of one-thirtieth of the monthly rate charged for each calendar day that the balance of the loan is outstanding. Interest may not be assessed on any interest earned under this subdivision.

(3) Rescission. A borrower may rescind a title loan, before the close of business on the next day of business after the loan is made, or, if the place of business where the loan is made is open 24 hours, before 5 p.m. on the next day of business after the loan is made, by returning to the licensed lender the proceeds of the loan. The licensed lender may not charge the borrower any fee for rescinding the title loan as provided in this subsection.

(4) Other requirements.

(a) A licensed lender may not make a title loan to a borrower that is secured by an interest in a motor vehicle if the motor vehicle is subject to another security interest.

(b) A licensed lender may not require a borrower to provide the licensed lender with a key or copy of a key to a motor vehicle used as security for a title loan as a condition for making the title loan to the borrower.

(c) A licensed lender or person acting on behalf of a licensed lender may not take possession of a motor vehicle used as security for a title loan to a borrower without sending notice to the borrower at least 20 days prior to taking possession. The notice shall state the intent to take possession and describe the basis for the right to take possession. This paragraph does not apply to possession that is obtained by a borrower's voluntary surrender of a motor vehicle.

(d) A licensed lender or other person may charge a borrower a reasonable storage fee for a motor vehicle of the borrower of which the licensed lender or person acting on behalf of the licensed lender has obtained possession, including possession that is obtained by voluntary surrender.

(e) A licensed lender shall return to a borrower the amount of any proceeds from the disposition of a motor vehicle used as security for a title loan to the borrower that exceed the borrower's liability to the licensed lender for the loan.

(f) A borrower is not liable to a licensed lender for any deficiency resulting from the licensed lender's disposition of a motor vehicle used as security for a title loan, unless the borrower has done any of the following:

1. Impaired the licensed lender's security interest by intentionally damaging or destroying the motor vehicle.

2. Intentionally concealed the motor vehicle.

3. Pledged to the licensed lender a motor vehicle that is already encumbered by an undisclosed prior lien.

4. Subsequent to obtaining the title loan, pledged or sold to a third party a motor vehicle used as security for a title loan without the licensed lender's written consent.

History: 2009 a. 405; 2011 a. 32.