How Are Loan Companies Allowed to Charge in Florida 89.9?Hi there! Ever ponder how Florida allows lending businesses to charge exorbitant interest rates? Now, you can stop wondering! A new law that was just approved in Florida altered the landscape of consumer finance lending. Allow me to explain it simply.
What’s the big deal about interest rates?
Think of interest rates like a fee for borrowing money. It’s like renting a house – you pay rent to use someone else’s property. But, if the rent is too high, it’s not fair, right? That’s why Florida created the Consumer Finance Act to protect borrowers from crazy-high interest rates.
The old rules
Before the new law, lenders couldn’t charge more than 18% per year on loans of $25,000 or less. Simple enough! But, there were some exceptions to this rule.
The new rules
Now, here’s where it gets interesting. The new law changed the exceptions to the 18% cap. It’s like a tiered system, where the interest rate depends on how much you borrow.
- Tier 1: Up to $10,000
Lenders can charge up to 36% interest. Yikes! - Tier 2: $10,000 – $20,000
Lenders can charge up to 30% interest. - Tier 3: $20,000 – $25,000
Lenders can charge up to 25% interest.
What else changed?
The new law also gave borrowers a bit more breathing room when it comes to delinquency fees. Lenders now have to wait 12 days after default (instead of 10) to charge those fees. And, during a FEMA disaster, lenders can’t charge delinquency fees, repossess collateral, or take civil action for loan collections. They also need to notify the Office of Financial Regulation if any assistance programs are impacted and provide annual reports on loans issued.
When does it all start?
The law went into effect on July 1, 2024. So, lenders that operate in Florida should review the law’s requirements and ensure their practices comply with its directives.
Conclusion
The new Florida law has brought significant changes to consumer finance loan interest rates. Borrowers need to be aware of the tiered system, which allows lenders to charge different interest rates based on the loan amount. Additionally, the law provides some protections for borrowers, such as extended delinquency charge periods and suspension of certain actions during FEMA disasters.
Lenders must comply with the new regulations to avoid any legal issues. As a borrower, it’s essential to understand your rights and responsibilities under this new law. Remember, knowledge is power, and being informed can save you from unnecessary financial stress. Stay informed, and borrow wisely!
FAQs
What is the Florida Consumer Finance Act?
The Florida Consumer Finance Act is a law that regulates consumer finance loans in Florida, protecting borrowers from high interest rates.
What is the maximum interest rate allowed on loans of $25,000 or less?
The maximum interest rate allowed is 18% per year, but there are exceptions for larger loans.
How do the new interest rate tiers work?
The tiers are: up to 36% for the first $10,000, up to 30% for $10,000-$20,000, and up to 25% for $20,000-$25,000.
What changed with delinquency fees?
Lenders now have to wait 12 days after default (instead of 10) to charge delinquency fees.
When did the new law take effect?
The law became effective on July 1, 2024.