According to the state law of Florida, payday lending is legal.
Florida imposes a $500 amount limit on payday loans offered in the state. Payday loans can be taken for the period from 7 to 31 days with the maximum finance charge of 10% for every $100 (plus verification fee not more than $5) and 304%* APR. One loan at a time is allowed. There is a cooling-off period of 24 hours between 2 consecutive loans. No rollovers are allowed. Criminal actions are prohibited.
Payday loans in Florida are referred to as “deferred presentment transactions“. The term “deferred presentment” means the act of writing a post-dated check for the money borrowed now.
This service, despite strict Florida’s payday loan laws, is very high in demand as there is always a necessity in cash. At the moment, Florida is expecting the new regulation to take effect ( July 1, 2019). This law will allow payday lenders to offer loans up to $1,000 with the term up to 90 days.
Florida Payday Lending Statutes
The state of Florida considers payday lending legal according to the Fl. Stat. Ann. § 560.402 et seq. and Rule 69V-560.901-912.
All payday lenders in Florida need to be licensed under the Fl. Stat. Ann. § 560.402 et seq. in order to operate in the state.
Loan Amount in Florida
One more limitation stated by the Office is that a person is not allowed to get more than one payday loan at a time. All payday loan applicants enter the Deferred Presentment Transaction System upon application. According to the state law, each licensed lender must check this system before issuing a loan to an applicant, and refuse in case the latter is already listed there.
Rates, fees and other charges in Florida
- Florida does not allow any finance charges and fees that exceed 10% plus a verification fee (not more than $5).
“A deferred presentment provider or its affiliate may not charge fees that exceed 10 percent of the currency or payment instrument provided. However, a verification fee may be charged as provided in §560.309(7). The 10 percent fee may not be applied to the verification fee. A deferred presentment provider may charge only those fees specifically authorized in this section.” (Fl. Stat. Ann. § 560.402 et seq.)
- APR equals 304% (*According to the Center for Responsible Lending 2019: “Typical APR based on average rate for a $300 loan advertised by largest payday chains or as determined by state regulator, where applicable.”).
Maximum term for a payday in Florida
- The loans are given for a period of 7-31 days and these terms should be adhered to.
- Rollovers are not allowed in Florida – so all the borrowed loans should be repaid in time. However, there are repayment plans offered on demand by the lenders.
- Criminal charges are prohibited in the state of Florida and a lender cannot take any actions of the kind to the borrower who is unable to repay.
- Payday lending is available both to the residents of Florida or to those who think of moving here.
- The law provides consumers in Florida with a 60-day grace period in case one is unable to repay in time. However, to use this feature, certain steps should be taken in advance.
Payday loans, or deferred presentment companies, are regulated by the Florida Office of Financial Regulation.
You can also file a complaint on their website with regard to illegal payday lender actions in Florida.
The History of Payday Loans in Florida
- 1990s – The industry was poorly regulated with lots of payday lenders “extending loans at rates well in excess of the state’s 18 percent usury limit“. (Center for Responsible Lending)
- 2001 – Florida’s payday loan law, the Deferred Presentment Act, passed. It contained all the current payday loan regulations and was meant to regulate and bring order into the industry. However, as time showed, its practices (meant for the better) failed.
- June 2, 2016 – The Consumer Financial Protection Bureau (CFPB) proposed a Payday Loan Rule that hasn’t yet fully come into effect (expected in November 2020).
- 2018 – Florida’s House and Senate passed the Deferred Presentment Transactions Law (SB 920) that will change payday loan regulation (to take effect on July 1, 2019). It was prompted by potential changes in federal regulations (namely by the Payday Loan Rule proposed by the CFPB in 2016).
- The need for changes was also caused by the fact that “From July 2016 through June 2017, Floridians borrowed $3.09 billion from payday lenders and paid $306 million in fees, according to legislative analysts.” Thus, in the attempt to help consumers, lawmakers decided to offer 3-month installment payday loans apart from the short-term loan product already in place.
- Thus, the new law makes it possible for borrowers to opt for installment loans; however, small payday loans would comply with the old rules. However, the maximum loan amount will be doubled ($1,000), the loan term will be up to 90 days, a cooling-off period will be from 13 days to 1 month, and a maximum loan fee won’t exceed 8% of the loan balance ever two weeks. The law will also prohibit all the prepayment penalties.
- There is much controversy around this law, however, and many industry opponents say that it will only bring more profit to the lenders and the customers will suffer even more.
(As of April 2019)