The Great Payday Lending Battle Understanding Florida Payday Loan Regulations

There are currently elected officials – both Democrats and Republicans – who have joined forces to push back against the CFPB’s new payday loan regulations. Many of the opponents of the CFPB’s proposed regulations have mentioned that Florida does a great job regulating this industry at the state level. As such, these people believe that states should have the right to regulate short term loans without interference from the CFPB or any organization that represents the federal government. To help you get more insight into this issue, it is wise to understand the Florida payday regulations for yourself. Here are some things you need to know about payday lending regulations in Florida

Number of Loans are Restricted as are Loan Amounts

A borrower can only have a single outstanding payday loan at any given time. There is a centralized database that is used to track every payday loan processed in the Sunshine State. When a borrower pays back their loan, an extra 24 hour cooling off period is tacked on prior to that person being able to take out another loan. The maximum amount that someone can borrow from a payday lender is $500.

payday21Terms of Florida Payday Loans

A payday loan cannot be given for less than 7 days or more than 31. These loans cannot be rolled over. For example, if someone takes out a two week payday loan, the lender is not allowed to rollover (renew) the loan, tacking on extra fees and running the life of the loan for another two weeks. Note that in this scenario the total loan time would be under 31 days. Terms are set when a borrower takes out a loan. However, if they are not able to pay, loans can be extended without any additional fees being charged.

Payday Loan Fees

The laws in Florida put limits on fees that can be charged on payday loans. The fee cap is set at 10 percent of the loan amount. Additionally, any loan costs, like verification fees, are strictly limited to just five dollars per loan. It should also be noted that the fee cap is not one that accrues over the course of time. If someone were to take a year to pay off a payday loan, for example, the 10 percent would not snowball into a huge fee. If it were for a $200 loan, the fee would never be more than the 10 percent, or $20, plus costs that top out at $5.

Payday Loan Grace Periods

In Florida the law states that borrowers are given a 60 day grace period if they are not able to pay back loans on the original due date. In order to get the grace period, though, borrowers must set up an appointment with a credit counseling agency within a week of the loan due date and complete a credit counseling course within the 60 days of grace that are given. The credit counseling company may recommend a repayment plan, and the borrower must pay their debt according to this plan without incurring any extra fees or loan costs.

Collection Policies

If someone gives a lender a check and the check bounces, there are limits on what lenders can do. The lender cannot pursue criminal actions against the borrower. The lender is allowed to demand payment, but costs are capped at the 10 percent fee and a $5 fee for bad checks that the lender might get charged for from their own bank. Payday lenders can only get additional money if they file a lawsuit and the court sees fit to side with the lending company on this matter.

These are just some of the main points of Florida payday lending regulation. Some are pushing for Florida to be the model for the entire nation, while others simply want the CFPB to back off and allow states to decide on their own how to best regulate the short term lending industry. Which solution do you think is the best for your state?