While payday lending is legal in Florida, it is subject to strict limitations. If you have a problem with a Florida payday lender, you can turn to the state for help. But if you obtained the loan from an out-of-state lender over the Internet or the telephone, the help that Florida can provide may be limited.
(To learn about other consumer protection laws in Florida, visit out Florida Debt Management Center.)
What Is a Pay Day Loan?
A pay day loan is an advance payment on a post-dated check you provide to the lender. The lender gives you money and you provide a signed repayment check which is generally dated to correspond with the date of your next paycheck. The post-dated check is for the amount the lender advanced to you plus interest (usually at a very high rate) and any allowed costs. The interest amount is usually called a fee. The lender agrees not to deposit your check until the agreed upon date shown on your signed check.
Most consumer advocates warn against using payday lenders because the interest and fees are exorbitant. See Reasons to Avoid Payday Loans.
Use a Florida Licensed Lender
If you find yourself in a bad spot and have no other choice than to take out a pay day loan in Florida, it is a good idea to make sure that you are dealing with a licensed lender. Pay day lenders licensed in Florida must comply with the state laws and respond to inquiries by the Office of Financial Regulation in order to maintain their license.
If you have a problem with a pay day lender, you can file a complaint with the state and request assistance. But if the lender is not licensed in Florida, and is operating from another state or country through the Internet or telephone, there may be little the state can do.
Limitations on Payday Lending in Florida
Payday lending is limited in several ways in Florida. The law places limits on
- the amount of the loan
- the number of loans you can have outstanding
- the length of the loan term
- the fees and costs that can be charged, and
- the collection process if you don’t pay.
Amount of the loan. In Florida, payday advances cannot exceed $500. There are no exceptions.
Number of loans. You can only have one outstanding payday loan at a time. Loans are tracked through a central database. When you pay back the loan, there is an additional 24-hour cooling-off period before you can take out another pay day loan.
Loan term. Pay day loans cannot be for less than seven days or more than 31 days. Rollovers are also prohibited. If you take out a 14-day payday loan, for example, the lender is not permitted to rollover, or renew, the loan, charging the fees again, for an additional 14 days -– even though the entire length of time would be less than 31 days. The term is set when you take out the loan, but if you are unable to pay, there is something you can do to extend the term of the loan without additional charges or interest.
Grace period. The law provides you with a 60-day grace period if you are unable to pay back the loan upon the expiration of the contract term. But to take advantage of this you must: (1) make an appointment with a credit counseling agency within seven days of the original due date, and (2) complete the credit counseling within the 60-day grace period. If the credit counseling agency recommends a repayment plan, you may repay the debt in accordance with the plan without incurring additional fees or costs.
Fees and costs. Florida statutes limit the fee that can be charged on a payday loan to 10% of the loan amount. Costs, in the form of a verification fee, are limited to five dollars for each loan. This is not an annual interest rate but the rate that is being charged for the specific loan term. For example, a seven-day payday loan of $100 with a 10% fee, would cost you ten dollars plus the verification fee for the seven-day period. Applying an annual rate, the 10% fee is equivalent to an interest rate in excess of 500%.
Collection. If the check you provided to the payday loan lender does not clear the bank and you are not able to pay, there are limitations on what the payday lender can do. The payday lender may not pursue criminal action against you for a bad check. They can demand payment but costs in are limited to the 10% fee, the $5 cost and any bad check fees imposed by the lender’s bank (if you did not inform the lender in advance that the check could not be honored). No additional costs may be charged unless a lawsuit is filed and additional costs are imposed by the court. The lender may seek to recover interest on its judgment but it is limited to the judgment rate in the state generally and not a rate based on the payday loan fee.
Additional Requirements Under Florida Law
Florida law requires that the payday loan agreement be in writing and signed by both parties on the date the loan is given. The loan agreement must contain:
- the name and address of the lender and the lenders business office
- the name of the lender's representative who signed the agreemen
- a clear description of the agreement including the date of the loan, the amount, the loan term, and the transaction number.
The agreement cannot legally contain terms whereby the borrower agrees to hold the lender harmless for any damages or actions, waives any rights under the law, agrees in advance to the entry of a judgment or wage garnishment, or waives any defenses to repayment.
The proceeds of the loan may be provided in a form other than cash only if the borrower agrees. The fees allowed under the law may not be collected in advance, and the lender cannot require any additional security or guarantors. Lastly, a copy of the signed agreement must be provided to the borrower at the time of the transaction.