No, they are not, because the interest rates they charge violate New Jersey's usury laws . New Jersey has an interest rate cap of 30%, and rates offered by car title lenders is often well in excess of 100%.
In fact, many of their web sites do not disclose the APR. The site may have an FAQ page, but a frequent question like "What are your rates?" is not answered. The biggest downside, of course, is that if you do not pay the loan and the usurious interest, you will end up losing your car.
Would the Lien Be Enforced?
An interesting question, though, is whether the New Jersey Motor Vehicle Commission would enforce the lien? Should a lender be able to ask for the state's help to collect on a loan that violates the state's law?
As a practical matter, the lender would still repossess the car, and ultimately, you would have to go to court to void the lien and get the car back.
The best solution is not to take the loan out in the first place. Cash advances on credit cards are, comparatively speaking, a better alternative, in that the rates are under 30% and do not result in the loss of your car if you miss a payment.
But What Should I Do Instead?
If you are looking for a car title loan to be able to pay the bills, then you are in some serious financial straits. If you are going to these lenders for money not just to pay monthly expenses, but to deal with crushing medical bills and/or credit card balances, perhaps you should consider filing bankruptcy.
If you live in southern New Jersey and are considering filing bankruptcy, please feel free to call me at 856-432-4113 or contact me through this site for a free consultation in my Woodbury office to discuss your case.
If you have more questions about bankruptcy, then download my free book,Top Questions People Ask About Filing Bankruptcy in New Jersey.
If you are looking for more information on how bankruptcy might help you with your divorce, then you should download my free book, Top Questions Divorcing Couples Ask About NJ Bankruptcy.