A title loan is a short-term loan secured by your car's title: miss payments and the lender can take the car. In the form sold across much of the country, it is not legal in Massachusetts.

No Massachusetts law creates a title loan license. Instead, a title loan falls under the state's Small Loan Act. That law caps what an unlicensed lender can charge, and the Attorney General has used it to void title loans and shut out title lenders.

How a 12 percent cap rules the product out

Massachusetts General Laws Chapter 140, Section 96 covers any loan of $6,000 or less. If interest and expenses together exceed 12% a year on the amount you actually receive, the lender needs a license from the Division of Banks. Expenses include brokerage, recording, extension and forbearance fees, so a lender cannot move the cost into fees to get around the cap. The rule applies to out-of-state lenders who lend to Massachusetts residents.

The penalties are criminal. Under Section 110, unlicensed lending can bring up to 10 years in state prison or a $10,000 fine. Any loan an unlicensed person makes is void. Smaller loans have their own protection: Section 90 limits loans under $1,000 to 18% a year in the first year, and it voids any clause in which the borrower waives that limit.

The same small-loan rules shape payday loans in Massachusetts.

Rule (as read September 2026) Massachusetts figure
Loan size covered by the Small Loan Act $6,000 or less (Section 96)
Cap without a license, interest plus fees 12% a year (Section 96)
Loans under $1,000 18% a year in year one, then 6% (Section 90)
Term and rollovers No title-loan-specific rule exists
Unlicensed loan Void, and a crime (Section 110)

What enforcement has looked like

The AG pursued a lender that operated as Massachusetts Title Loan, Inc. and Capital Title Loan. It made loans, often under $5,000, at rates of up to roughly 300%. The case secured more than $900,000 in debt relief, restitution and penalties.

Online lenders get the same treatment. A court judgment against an unlicensed online title lender voided hundreds of loans. It also dissolved the liens on borrowers' cars, and the borrowers received clean titles.

Not the same as a car loan from a dealer

A loan used to buy a car is a separate, legal product. The Division of Banks requires non-bank auto lenders to be licensed and caps them at 21% APR. Before repossessing, the lender must send notice and give you 21 days to cure the default, and it cannot switch off the car with a GPS device until those 21 days pass. The page does not say whether sale proceeds above the debt come back to you.

You can check whether any lender is licensed with the Division of Banks. The sources name no Massachusetts assistance programs and give no figures for credit union alternatives. Credit union personal loans and loans secured by your savings are the lawful options they point to.

If you are buying a house in the next few months

An underwriter reads your bank statements line by line. A regular payment to an unfamiliar lender will usually draw a request for a letter of explanation and the loan documents. Its monthly payment is also likely to count in your debt-to-income ratio.

If a lender offered you a title loan, you may owe less than you think: an unlicensed loan is void. Ask the Attorney General's office before you pay it off from your closing funds. Then pay off or dispute the loan before you apply, and keep the paperwork showing it has been closed.